Q4 2024 HCI Group Inc Earnings Call
Operator: Good afternoon, and welcome to HCI Group's fourth quarter 2024 earnings My name is Ali and I will be your conference operator. At this time, all participants will be in a listen-only mode. Before we begin today's call, I would like to remind everyone that this conference call is being recorded.
Good afternoon, and welcome to HCI groups fourth quarter 2024 earnings call.
Sally: My name is Sally and I will be your conference operator.
Sally: At this time, all participants will be in a listen only mode.
Sally: Before we begin today's call I would like to remind everyone that this conference call is being recorded and will be available for replay through March 27th 2025, starting later today.
Operator: and will be available for replay through March 27th, 2021. starting later. The call is also being broadcast live via webcast and available via webcast replay until February 27th of 2021. on the Investor Information section of HCI Group's website. www.hcigroup.org.
Sally: The call is also being broke half life via webcast and available via webcast replay until February 27 of 2026 on the Investor information section of H C. I group's website.
Sally: W. W. W tossed HCI group dotcom.
Matt Glover: I would now like to turn the call over to Matt Glover, Gateway Investor Relations. Matt, please proceed. Thank you, and good afternoon.
Speaker Change: I would now like to turn the call over to Mark Glover Gateway Investor Relations.
Mark Glover: Please proceed.
Mark Glover: Thank you and good afternoon welcome.
Karin Coleman: Welcome to HCI Group's fourth quarter 2024 earnings call.
Mark Glover: Welcome to HCI groups fourth quarter 2024 earnings call.
Karin Coleman: On today's call is Karin Coleman, HCI's Chief Operating Officer, Mark Harmsworth, HCI's Chief Financial Officer, Paresh Patel, HCI's Chairman and Chief Executive Officer.
Mark Glover: On today's call are Kevin Coleman.
Paresh Patel: Chief operating officer, Mark Harmsworth, Hei, Chief Financial Officer, Paresh Patel, Nci's, Chairman and Chief Executive Officer.
Karin Coleman: Following Karin's operational update, Mark will Again, I'd like.
Voluntary the operational update Mark will review, our financial performance for the fourth quarter of 2024, and the Paris will provide a strategic update.
Paresh Patel: Today's webcast please visit the Investor <unk>.
Paresh Patel: Section of our corporate website at Www Dot HCI group Dotcom.
Paresh Patel: Before we begin I'd like to take the opportunity to remind our listeners that todays presentation and responses to questions may contain forward looking statements made pursuant to the private Securities Litigation Reform Act of 1995.
Paresh Patel: Words, such as anticipate estimate expect intend plan project.
Debt and other similar words and expressions are intended to signify forward looking statements.
Paresh Patel: Forward looking statements are not guarantees of future results and conditions, but rather are subject to various risks and uncertainties.
Paresh Patel: Some of these risks and uncertainties are identified in the company's filings with the Securities and Exchange Commission.
Paresh Patel: Should any risks or uncertainties develop into actual events or developments that the material adverse effects on the company's business.
Matt Glover: https://www.hci.com.au And with that, I'd like to turn the call over to... Thank you, Matt, and welcome everyone.
Paresh Patel: Rachel conditions and results of operations.
Paresh Patel: <unk> disclaims all the obligations to update any forward looking statements now with that I'd like to turn the call over to Kevin Coleman and Chief operating officer here.
Speaker Change: Thank you, Matt and welcome everyone at the beginning of the fourth quarter Hurricane Milton made landfall in Florida as a category three hurricane losses from this event or significant and our Hearts go out to everyone impacted we continue to work with our policyholders to pay claims and help them rebuild their lives.
Karin Coleman: At the beginning of the fourth quarter, Hurricane Milton made landfall in Florida as a Category 3 hurricane. Losses from this event were significant, and our hearts go out to everyone impacted. We continue to work with our policyholders to pay claims and help them rebuild their lives.
Karin Coleman: With that said, our results continue to demonstrate the resiliency of our business model. Mark will walk you through the numbers, but I think it's important to highlight several notable things that HCI accomplished in 2024. We handled over 22,600 claims during the year, with over half of them coming from Hurricanes Debbie, Helene, and Milton. Ultimately, we expect these three events will result in HCI paying over half a billion dollars to help Florida rebuild. Despite this, we held our rates steady in Florida, and we plan to continue to do so in 2025. Our customers appreciate that we are a steady partner and the retention rate of our existing customers remains strong at approximately 90%.
Speaker Change: With that said our results continue to demonstrate the resiliency of our business model.
Speaker Change: Mark will walk you through the numbers, but I think it is important to highlight some highlight several notable things that HCI accomplished in 2024.
Speaker Change: We handled over 22600 claims during the year with over half of them coming from Hurricanes, Debbie Helene and Milton.
Speaker Change: Ultimately we expect these three events will result in HCI paying over half a billion dollars to help Florida rebuilds.
Speaker Change: Despite this we held our rate study in Florida, and we plan to continue to do so in 2025.
Speaker Change: Our customers appreciate that we are a steady partner and the retention rate of our existing customers remained strong at approximately 90%.
Karin Coleman: During the year, we offered over 68,000 citizens policyholders a private market option and nearly 53,000 policyholders moved to HCI. This implies a blended success rate across our different insurance companies of 77%.
Speaker Change: During the year, we offered over 68000 citizens policyholders are private market option and nearly 53000 policyholders move to HCI. This implies a blended six eight across our different insurance companies up 77%.
Karin Coleman: We started a new insurance company, Condo Owners Reciprocal Exchange, which grew to approximately $70 million of in-force premium. Across our different growth initiatives, we increased our policies and force from 247,000 to more than 272,000. and our in-force premium grew 22% to over $1.2 billion. This was accomplished all while reducing our underlying net combined ratio by 10 percentage percent.
Speaker Change: We started a new insurance company condo owners reciprocal exchange, what's your grew to approximately $70 million of in force premium.
Speaker Change: Across our different growth initiatives, we increased our policies in force from 247000 to more than 272000 <unk>.
Speaker Change: And our in force premium grew 22% to over $1 $2 billion.
Speaker Change: This was accomplished all while reducing our underlying net combined ratio by 10 percentage points.
Karin Coleman: In the fourth quarter, HCI continued to deliver on its commitment to return value to our shareholders by paying a dividend of $0.40 per share, our 57th consecutive quarterly dividend. We were able to achieve all of this because we have a solid management team with proven successes backed by best-in-class technology. HCI has been able to consistently grow its top line and bottom line, and we look forward to continuing on this path.
Speaker Change: In the fourth quarter HCI, continuing to deliver on its commitment to return value to our shareholders by paying a dividend of <unk> 40 per share our 57th consecutive quarterly dividend.
Speaker Change: We were able to achieve all of this because we have a solid management team with proven successes backed by best in class technology.
Speaker Change: Hei has been able to consistently grow its topline and bottom line and we look forward to continuing on this path.
Mark Harmsworth: Now I'll turn it over to Mark to provide more details on our financial... Thanks, Karin. On our last earnings call, we detailed the expected impact of Hurricane Milton on the fourth quarter and said we expected underlying earnings to mitigate much of it. As expected, the net impact of Hurricane Milton was $128 million, including $78 million of net loss expense and $50 million for the reversal of benefits under a multiyear reinsurance agreement. Including that impact, pre-tax income in the fourth quarter was $5.9 million and diluted earnings per share were $0.23. For the full year, even with the impact of three hurricanes, pre-tax income was $173 million and diluted earnings per share were $8.89, illustrating the strength of underlying earnings.
Mark Glover: Now I'll turn it over to Mark to provide more details on our financials.
Mark Glover: Thanks, Karen on our last earnings call, we detailed the expected impact of Hurricane Melton on the fourth quarter and said, we expected underlying earnings to mitigate much of it as expected. The net income the net impact of Hurricane Milton was $128 million, including 78 million of net loss expense.
Mark Glover: And $50 million for the reversal of the benefits under our multi year reinsurance agreement and including that impact pre tax income in the fourth quarter was $5.9 million and diluted earnings per share were twenty-three sentence.
Mark Glover: For the full year, even with the impact of three Hurricanes pre tax income was $173 million and diluted earnings per share were $8.89 illustrating the strength of underlying earnings there.
Mark Harmsworth: There are a few reasons we've been able to grow underlying earnings over the past couple of years. First, we've been adding policies and growing revenue without really adding a lot of operating expense, driven by our technology and overall operational efficiency. Over the past two years, we've grown in-force premiums by 50% and only added a handful of people. Second, our loss ratio has been steadily declining. When legislative changes were introduced in Florida, we expected the loss ratio would drop from 40% to 30%, and that happened. In 2024, it dropped even further. For the full year 2024, our non-CAT growth loss ratio was less than 25%.
Mark Glover: There are a few reasons, we've been able to grow underlying earnings over the past couple of years.
Mark Glover: First we've been adding policies and growing revenue without really adding a lot of operating expense driven by our technology and overall operational efficiency over the past two years, we've gone in force premiums by 50% and only added a handful of people second our loss ratio has been steadily declining.
Mark Glover: When legislative changes were introduced in Florida, we expected that the loss ratio would drop from 40% to 30% and that happened in 2024. It dropped even further for the full year 2024 are non cat gross loss ratio was less than 25% the combined impact of these two.
Mark Harmsworth: The combined impact of these two things, strong operating leverage and a lower loss ratio, have resulted in a noteworthy improvement in our combined ratio. Our normalized combined ratio is now about 75%. While the underlying combined ratio was better than that in the fourth quarter and should be again for the first half of 2025, we expect the combined ratio to be about 75% once reinsurance and commissions kick in for the recent citizens' assumptions.
Mark Glover: <unk> strong operating leverage and a lower loss ratio have resulted in a noteworthy improvement in our combined ratio or normalized combined ratio is now about 75%.
Mark Glover: While the underlying combined ratio was better than that in the fourth quarter and should be again for the first half of 2025, we expect the combined ratio to be about 75% once reinsurance and commissions kick in for the recent citizens assumptions.
Mark Harmsworth: There is one more positive trend enhancing underlying earnings beyond what's happening with the combined ratio. Investment income has doubled over the last couple of years through a combination of higher investment balances and higher rates. Because we kept our investments short term when rates were low, we've been able to capitalize as rates have increased. The impact of all of these factors has improved underlying earnings to the point where we can be profitable and generate capital in an active storm year like 2024.
Mark Glover: There is one more positive trend enhancing underlying earnings beyond what's happening with the combined ratio investment income has doubled over the last couple of years through a combination of higher investment balances and higher rates because we kept our investment short term when rates were low we've been able to capitalize as rates have increased.
Mark Glover: The impact of all of these factors has improved underlying earnings to the point, where we can be profitable and generate capital and an active storm year like 2024 now.
Mark Harmsworth: Now just a couple of things on the balance sheet. Even with three hurricanes and paying $1.60 per share in dividends, book value increased by almost $9 per share from $33.36 at the start of the year to $42.10 at the end of the year. Debt-to-cap has also improved materially during the year. We started the year with a debt-to-cap ratio of 50% and ended the year at 34%. During 2024, we reduced consolidated debt by $80 million, grew underwriter surplus by 50%, and holding company liquidity is still over $200 million at the end of the year. In summary, 2024 was a strong year for the company, despite an active storm season, and we are well positioned for the future.
Mark Glover: Just a couple of things on the balance sheet, even with three hurricanes and paying a $1 60 per share in dividends book value increased by almost $9 per share from $33.36 at the start of the year to $42.10 at the end of the year debt to cap is also improved materially during the year, we started the year with a debt to cap.
Mark Glover: Ratio of 50% and ended the year at 34%.
Mark Glover: During 2024, we reduced consolidated debt by $80 million grew underwriters surplus by 50% and holding company liquidity is still over $200 million at the end of the year.
Paresh Patel: In summary, 2024 was a strong year for the company. Despite an active storm season, and we are well positioned for the future revenue was growing underlying earnings are increasing and the balance sheet continues to strengthen and with that I'll hand, it over to Paresh.
Mark Harmsworth: Revenue is growing, underlying earnings are increasing, and the balance sheet continues to strengthen.
Pareshbhai Patel: And with that, I'll hand it over to Paresh. Thank you, Mark. As Mark and Karin highlighted in their comments, HCI Group ended the year on a very positive note. Overall, we grew gross premiums earned by over 40% for the full year, while also increasing profitability. The combination of our best-in-class technology and the ongoing impact of reform in Florida has contributed to this strong outcome. Looking to the future, continuing on our current trajectory, and hopefully without the hurricanes, would be very impressive. And in the short term, we intend to do just that. Our new reciprocal insurance company, Tero, just became operational a few days ago and we expect it to be an additional driver of growth.
Thank you Mark.
Paresh Patel: As Mark and kind of highlighted in the comments HCI group ended the year on a very positive note.
Paresh Patel: Overall, we grew gross premiums earned by over 40% for the full year, while also increasing profitability.
Paresh Patel: The combination of a best in class technology, and the ongoing impact of reform in Florida has contributed to this strong outcome.
Paresh Patel: Looking to the future continuing on our current trajectory and hopefully without the hurricanes will be very impressive.
And in the short term, we intend to do just that.
Paresh Patel: Our new reciprocal our Neurostar Mercury insurance company Taro, just became operational a few days ago, and we expect it to be an additional driver of growth.
Pareshbhai Patel: But we see an even bigger opportunity. What Karin Mark's comments highlighted was that our technology has a proven track record and it's a game changer. The technology currently supports over $1.2 billion of premium across the companies controlled by HCI Group. But HCI Group represents less than 1% of the total homeowners premium in the U.S. And given the increasing frequency and severity of catastrophe losses, we believe there's an opportunity to use our technology to drive a better underlying result for the other 99% of the market.
Paresh Patel: But we see an even bigger opportunity.
Paresh Patel: What Karen Mark's comments highlighted was that our technology has a proven track record and it's a game changer.
Paresh Patel: The technology currently supports over $1 2 billion of premium across the company is controlled by HCI group.
Speaker Change: But HCI group represents less than 1% of the total homeowners premium in the U S.
Speaker Change: And given the increasing frequency and severity of catastrophe losses, we believe there's an opportunity to use our technology to drive a better underwriting result for the other 99% of the market.
Pareshbhai Patel: So to that goal, we have set up a new structure that will consist of two distinct operating units. The first unit includes our four top performing insurance companies and our captive reinsurer. Additionally, this unit will include operations in claims management and real estate. This group has its own dedicated team who will continue to focus on delivering strong and writing results, creating a positive claims experience for our policyholders, while diligently managing risk and generating opportunistic income from our earthquake portfolio.
Speaker Change: So to that goal.
Speaker Change: We have set up a new structure that would consist of two distinct operating units.
Speaker Change: The first unit includes our four top performing car insurance companies and our captive reinsurer.
Speaker Change: Additionally, this unit will include operational our operations and claims management and real estate.
Speaker Change: This group has its own dedicated team who will continue to focus on delivering strong underwriting results, creating a positive claims experience for our policyholders.
Speaker Change: While diligently managing risk and generating opportunistic income from our real estate portfolio.
Pareshbhai Patel: Our second operating unit includes our market-leading technology platform and our insurance management operations. This unit helps empower insurers to deliver better underwriting outcomes and optimize operational efficiency.
Speaker Change: Our second operating unit includes our market, leading technology platform and our insurance management operations.
Speaker Change: This unit helps empower insurers to develop to deliver better underwriting outcomes and optimize operational efficiencies.
Pareshbhai Patel: However, this unit does not include any insurance companies and therefore we felt it appropriate at this time to rename the unit from being TIPTEP Insurance Group to AXIO Group Inc. HCI Group is an independently viable entity with solid profitability, strong cash flows, no immediate capital needs, and more importantly, no hurricane volatility. In 2024, HCI Group earned approximately $35 million of pre-tax income, and we expect that number to grow significantly in 2025. HCI Group's technology has demonstrated its ability to navigate in a catastrophe-prone world while significantly enhancing the profitability of its customers. which are currently the four insurance carriers under the HCI umbrella.
Speaker Change: However, this unit does not include any insurance companies and therefore, we felt it appropriate.
Speaker Change: At this time to rename the unit from being tipped up insurance group two eggs Geo Group Inc.
Speaker Change: <unk> group is an independently viable entity with solid profitability strong cash flows no immediate capital needs and more importantly, no hurricane volatility.
Speaker Change: In 2024, <unk> group earned approximately $35 million of pre tax income and we expect that number to grow significantly in 2025.
Speaker Change: Exit groups technology has demonstrated its ability to navigate in the catastrophe prone world, while significantly enhancing the profitability of its customers John.
Speaker Change: <unk> currently the for insurance carriers under the HCI umbrella.
Pareshbhai Patel: But the need for this technology is only growing.
Speaker Change: With a need for this technology is only growing.
Pareshbhai Patel: So to fully embrace this opportunity, we want to make HCI Group a standalone entity so that it can do the same thing for other insurance companies in other geographies. Same vision, same management team, but fewer restrictions and a much bigger market time. And therefore, we are evaluating a range of strategic alternatives with the assistance of outside advisors to take advantage of this market opportunity. During this review, we intend to consider potential actions, solutions, or structures that will unlock additional value for our shareholders. But we will not be entertaining a sale of the platform at this point.
Speaker Change: So to fully embrace this opportunity we wanted to make extra group a standalone entity.
Speaker Change: So that it can do the same thing for other insurance companies in other geographies.
Speaker Change: Same vision same management team, but fewer.
Speaker Change: Restrictions and a much bigger market Tam.
Speaker Change: And therefore, we are evaluating a range of strategic alternatives.
Speaker Change: With the assistance of outside advisors.
Speaker Change: To take advantage of this market opportunity.
Speaker Change: During this review.
Speaker Change: We intend to consider potential actions solutions all structures.
Speaker Change: Unlock additional value for our shareholders.
Speaker Change: But we will not be entertaining a sale of the platform at this point, it's just too valuable wood.
Pareshbhai Patel: It's just too valuable.
Pareshbhai Patel: With that, I'll turn it over for questions. Thank you.
Speaker Change: With that I'll turn it over for questions.
Speaker Change: Yes.
Speaker Change: Thank you at this time, we will be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad.
Operator: At this time, we will be conducting our question and answer session. If you would like to ask a question, please press star 1 on your telephone. Your confirmation tone will indicate your line is available. You may press star 2 if you would like to remove your question. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the button.
Speaker Change: A confirmation tone will indicate your line is in the question queue. You May press star two if he would like to remove your question from the queue.
Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing Mr. Keyes.
Operator: One moment please, while we poll for questions.
Speaker Change: One moment, please while we pull for questions.
Speaker Change: Thank you our.
Matthew Carletti: Our first question is coming from Matt Carletti with Citizens JMP. Thanks. Good afternoon.
Mass Karaleti: Our first question is coming from mass Karaleti with citizens JMP. Your line is live.
Speaker Change: Hey, Thanks, good afternoon.
Oh.
Pareshbhai Patel: Paresh, maybe following up on your commentary there about separating the groups. You've been talking for some time about how you view Florida as being kind of well ahead of the rest of the country in terms of dealing with catastrophic weather and changing climate and things like that. we've got kind of a reminder of that. January with the fires in California. You as we think about kind of outside Florida and your knowledge already in these kind of challenging areas. Can you help us with how you might go about that? So if you use California as an example, should we expect to see?
Mark Glover: Paresh, maybe following up on kind of your commentary there about separating the groups.
Mark Glover: You've been talking for some time about how you view, Florida as being kind of well ahead of the rest of the country in terms of dealing with.
Mark Glover: Catastrophic weather and changing climate and things like that.
Mark Glover: Yeah, We got kind of a reminder of that in in January with the buyers in California.
Mark Glover: As we think about kind of opportunities.
Mark Glover: Outside Florida, and your knowledge already in these kind of challenging areas.
Mark Glover: Can you help us with how you might go about that so if you use California as an example.
Mark Glover: Should we expect to see.
Pareshbhai Patel: HCI or any of the carriers at any point.
Mark Glover: HCI or any of the carriers at any point.
Pareshbhai Patel: Take on some risk there, even if on a EMS basis or otherwise, or would you look to use Exeo group as more the means to to access an opportunity like Great question, Matt. And look, speaking of the unfortunate events in California. and our hearts go out to all those people as well. What clearly California is in desperate need of is a solution that actually is financially viable and that can withstand. probably will be additional wildfires that will occur in the coming years and do it comfortably. We have just done that, surviving three hurricanes in Florida.
Mark Glover: On some risk there, even if on the E&S basis or otherwise.
Mark Glover: Or would you look to use mgo group as more the means to to access an opportunity like that.
Speaker Change: Great question, Matt and look speaking of the unfortunate events in California.
Speaker Change: And our Hearts go out to all those people as well.
Speaker Change: What clearly, California is in desperate need of is a solution that actually is financially viable and that can withstand.
Speaker Change: Well, it probably would be additional.
Speaker Change: As far as what occurred in the coming years.
Speaker Change: Do it comfortably we have just done that.
Speaker Change: So Ravi three hurricanes in.
Speaker Change: In Florida.
Speaker Change: But.
Pareshbhai Patel: In terms of the question as to how we would go approaching the market, it's a multifaceted idea. First things first is to make sure you have the technology that can do this, which we have clearly proven. The second part that we are, which you'll now come across is at the right moment. you know, it's a debate as to whether we do it just with an HCI group company, or we partner with somebody who's already in California, or we do both, right? Part of the whole thing of this was to remove Exeo group from having to exclusively deal with one or the other or whatever, the technology is going to be there ready to go.
Speaker Change: In terms of the question as to how we would go approaching the market.
Speaker Change: It's a multifaceted idea first things first is to make sure you have the technology that can do this which we've proven.
Speaker Change: Second part so we are which will now come across is that the right moment.
Speaker Change: It'll be a debate as to whether we do it just with.
Speaker Change: And HCI group company or we partner with somebody who is already in California, or we do both right part of the whole thing of this was to remove NGO group from having do.
Speaker Change: Exclusive deal with one or the other or whatever the technology is going to be there ready to go and it's just going to be a question of.
Pareshbhai Patel: And it's just going to be a question of what is the best way of going to market with it? And that's the flexibility I'm talking about in this separation that we're looking at. Does that help?
Speaker Change: What is the best way of going to market with it and that's the flexibility that I'm talking about in this.
Speaker Change: Operations that we're looking at does that help.
Matthew Carletti: It does, for sure.
Speaker Change: It does for sure.
Speaker Change:
Matthew Carletti: Next question just around takeout activity. You know, we've seen kind of the citizens numbers that get below a million as there's been, you know, obviously an elevated amount of takeouts.
Speaker Change: Next question just around.
Speaker Change: Take out activity.
Speaker Change: And kind of the citizens numbers that get below a million as theres been obviously, an elevated amount of take outs can you talk a little bit about one kind of how you view that pool of a million policies. So that are left and too.
Matthew Carletti: Can you talk a little bit about one, kind of how you view that pool of a million policies so that And two, you know, we saw the announcement of the kind of tarot going live, you know, does this having a reciprocal structure? can do takeouts expand? You always talk about the green light policies that are in citizens. Does it increase that number that there might be policies that don't? Yes, so a lot of questions there. Starting with citizens being just under a million policies at this point, yes, we continue to notice that there are still policies in there that we would consider green and would be worth depopulating.
Speaker Change: The announcement of kind of Taro going live.
Speaker Change: Having a reciprocal structure that can do take outs kind of expand because you always talk about the green light policies that are that are in citizens does it does it increase that number that there might be policies that don't fit.
Speaker Change: <unk> balance sheet, but might fit a reciprocal structure.
Speaker Change: Oh, yes, so lot of questions there.
Speaker Change: Starting with citizens being just under a million policies at this point.
Speaker Change: Yes, we continue to notice that there are so policies in there.
Speaker Change: But we would consider green and will be worth depopulated.
Pareshbhai Patel: There is some flux in the portfolio at the moment because of the rate change that has just been approved by for the citizens going forward. That will have some impact, but not as great as you would think. So overall, the citizens' opportunity is still there.
Speaker Change: There is some flux in the portfolio at the moment because of the.
Speaker Change: Rate changes that have just been approved by for the citizens going forward that'll that'll have some impact but not as great. As you would think so overall the citizen opportunity is still there and let's just put this into perspective, we've grown the business by.
Pareshbhai Patel: And let's just put this into perspective. We've grown the business by, you know, $200 million or so by taking on about 50,000 policies in the fourth quarter. So, you know. The 50, 60, 70, 80, 100,000 policies, can we find them? Absolutely. So that is there.
Speaker Change: 200 million or so by taking on about 50000 policies in the fourth quarter. So.
Speaker Change: Yes.
Speaker Change: There are 50, 60, 70, 80 800000 policies can refine them absolutely so that is there.
Pareshbhai Patel: The other thing with with Tero and Reciprocals and everything else. Tero, in its takeout just for as an item of note, did most of its assumption in northern Florida. It's almost like complementary to TipTap. So as we're doing these things, we are getting more and more adept at it. And one of the other items of note in the comments Karin made about how many offers we made and how many people chose to come with us, it really highlights how well our technology is now working because we've got very efficient. We only ask people to join who we think will be interested and are likely to say yes.
Speaker Change: The other thing with.
Speaker Change: With Taro in reciprocals and everything else.
Speaker Change: Payroll is takeout just four four as an item of note that most of its assumption and northern Florida, it's almost like complementary to tip tap.
Speaker Change: So as we're doing these things we are we are getting more and more adapt at it and one of the other items of note in the comments Karen made about how many offers we've made and how many people chose to come with us It really highlights how well our technology is now working because we.
Speaker Change: We've got we've got very efficient, we only ask people to join who we think would be interested and are likely to say, yes, we don't waste picks on folks who will not likely join or will go somewhere else et cetera. All of these efficiencies all built in to what Mark is talking with us about operating leverage and being able to.
Pareshbhai Patel: We don't waste picks on folks who will not likely join or will go somewhere else, et cetera. All of these efficiencies all build into what Mark is talking about, about operating leverage and being able to do this correctly. So, you know, we've seen this go over and over and over again in 2024.
Speaker Change: This correctly so.
Speaker Change: We've seen this go over and over and over again in 2024. So if there was any doubt about our technology.
Matthew Carletti: So if there's any doubt about our technology... The last 12 months really brings it home. For sure, that's very helpful.
Speaker Change: The last 12 months, who really brings it home.
Speaker Change: Yeah for sure.
Speaker Change: That's very helpful. And then just one quick numbers question if I could.
Matthew Carletti: And then just one quick numbers question, if I could. The 37% gross loss ratio in the quarter, obviously there's Milton impact in there. Was there any favorable development impact in the loss numbers in the quarter? And if so, what would be kind of the accident year, you know, gross loss ratio without it, or how much?
Speaker Change: The 37% gross loss ratio in the quarter, obviously, there's milton impact in there was there any favorable development impact in the in the last numbers in the quarter and if so what would be kind of the the accident year gross loss ratio without it or how much was it.
Mark Harmsworth: Yeah, so, hey Matt, it's Mark. So, yes, there's about $24.5 million worth of favorable development. that's included in the Q4 number. About 5 million of that relates to prior years. and the other $19-20 million relates actually to prior quarters of 2024. In terms of the normalized loss ratio, if you will, for the full year it was, the consolidated loss ratio full year normalized was 23.7 and in Q4 it was 19.5, I think. Great, very helpful.
Speaker Change: Yeah. So.
Speaker Change: Hey, Matt it's Mark So yes, there's there is about 24 and a half million dollars worth of favorable development.
Speaker Change: That's included in the Q4 number.
Speaker Change: About $5 million of that relates to prior years.
Speaker Change: And the other $19 million to $20 million relates to actually to.
Speaker Change: To prior quarters of 2024 in terms of the normalized loss ratio if you will.
Speaker Change: And for the full year. It was the consolidated loss ratio of full year normalized was $23 seven.
Speaker Change: And in Q4, it was $19 five I think.
Speaker Change: Alright, great very helpful. Thank you very much for all the answers.
Matthew Carletti: Thank you very much for all the answers.
Speaker Change: Okay.
Speaker Change: Thank you.
Michael Phillips: Our next question... from Michael Phillips with Oppenheimer. Thanks.
Michael Phillips: Our next question is coming from Michael Phillips with Oppenheimer. Your line is live.
Michael Phillips: Thanks, Good evening, everybody I will start off with just a follow up on that last question.
Mark Harmsworth: Good evening, everybody. I'll start off with just a follow-up to that last question, Mark, on the PYD. So $19 million from the first three quarters of 2024, I guess, would that be I think it could be possibly two things. You've talked about the litigation and how it's been favorable, and yet you've kept the preserves somewhat cushioned from that. Is that part of that, recognizing some of that, or is it just maybe some of the earlier attacks that happened in the year? Maybe, Helene, or anything else. No, I mean, it's a few things, right? I mean, it's largely driven by the fact that, you know, we make our initial selections and then watch the development and it was very clearly, clearly developing significantly better than we thought it would.
Speaker Change: A mark on the <unk>, so $19 million from the first three quarters of 2024, I guess would that be.
Speaker Change: I think it could be possibly two things you talked about the litigation and how it's been favorable and yet you kept it preserves somewhat cushion from that is that part of that recognizing some of that or is it just maybe some of the earlier cash that happened in the year, maybe helene or anything else.
Speaker Change: No. It's that it's I mean, it's it's a few things right I mean, it's largely driven by the fact that we make our initial selections and then watch the development and it was very clearly clearly developing significantly better than we thought it would.
Mark Harmsworth: Getting less lawsuits than we initially thought that was part of it, there's a lot of little things. Severity is a little bit lower than we initially thought it was going to be. and also a little bit less of a claims tale than we thought. So everything moving in the same direction and very clear that it was considerably better than we expected it to be and that quite frankly we were going to be well above the actuaries range if we didn't bring our selections down for the first nine months of the year. Okay, thank you. So that makes it sound like it's more of the former of what I said than the latter.
Speaker Change: Getting less lawsuits than we initially thought that was part of it there's a lot of little things.
Speaker Change: Severity is a little bit lower than we initially thought it was going to be.
Speaker Change:
Speaker Change: And also a little bit less of a claims tail than we thought.
Speaker Change: So everything moving in the same direction.
Speaker Change: And very clear that it was considerably better than we expected it to be and that quite frankly, we were gonna be well above the actuaries range. If we didn't bring our expense if we didn't bring our selections down for the first nine months of the year.
Speaker Change: Okay. Thank you that makes it sound like it's more of the former what I've said in the letter it's not so much any.
Mark Harmsworth: It's not so much any, any prior cats from 3Q, but it's more of better state, less litigation, better severity. Right? Yes, that's what you said. Yeah. Okay. Yes. Thank you.
Speaker Change: Okay. Prior tests from <unk>, but it's more of a better state litigation better severity right yeah.
Paresh Patel: Yeah, Okay. Okay. Thank you perish.
Pareshbhai Patel: Paresh, on the two, on the two structures. I guess when, you know, you mentioned the much bigger TAM, obviously, for the second start to your tech platform. Can you talk a little bit about that? Like, what do you see as the TAM? Maybe not specific numbers, but happy to take that if you want. But just maybe qualify, you know, how do you think of the TAM for that segment? Okay, so back to that $1.2 billion that's out there, that HCI controls. Nationally, I think we spend about $140 billion or so, I might be off by a year or two, but about $140 billion in homeowner's insurance premium is what's spent on an annualized basis.
Speaker Change: On the two on the two structures.
Speaker Change: I guess when you.
Speaker Change: You mentioned that the much bigger Tam obviously for the second start to your Tech platform can you can you talk a little bit about that like what do you see as the Tam maybe not specific numbers, but happy to take that if you want but just maybe qualify.
Speaker Change: How do you think of the Tam for that for that segment of the business.
Speaker Change: Okay, so back to that $1 2 billion that's out there.
Speaker Change: Okay.
Speaker Change: Controls.
Speaker Change: Nationally I think we spend about 140 billion or so it might be off by a year or two but about a $140 billion.
Speaker Change: In homeowners insurance premium is what's spent on an annualized basis.
Pareshbhai Patel: So, like I said, we're around 1%. But more and more carriers are struggling. Think of what's going on in California and all the stories coming out from the insurance carrier's perspective of trying to stay solvent, profitable in the light of those events. and little things come to mind like what should the premium be, you know, how should we do risk selection, how should we deploy our capital so that when these events, which will continue to occur, occur, we are not, you know, we're not financially hurt that badly, right? And given that environment... We've been facing that for 17 years and we've built technology that can do this really well.
Speaker Change: So like I said, we're around.
Speaker Change: Around 1%.
Speaker Change: But more and more carriers are struggling think of what's going on in California, and all the stories coming out from the insurance carrier's perspective of trying to say solve unprofitable.
Speaker Change: In the light of those events.
Speaker Change: Little things come to mind.
Speaker Change: Like what should the premium be.
Speaker Change: How should we do risk selection, how should we deploy our capital so that when these events, which will continue to occur occur we are not.
Speaker Change: We're not financially.
Speaker Change: Hurt that badly.
Speaker Change: And given that environment.
Speaker Change: We've been facing that for 17 years, and we've built technology that can do this really well.
Speaker Change: No.
Pareshbhai Patel: The technology that we had, nobody wanted to or was thinking about it outside Florida because everybody didn't have these kinds of catastrophes and disasters occurring before. Now they do, right? And if the premium under management on our platform You've already seen the leverage we're getting just by it growing. Imagine it went from $1.2 billion to $2.5 billion or $5 billion. $5 billion is, by the time we get there, we'll be about... 4% market share throughout the U.S. very, very small, but a huge opportunity. So that kind of gives you an idea as to the time we're looking at here.
Speaker Change: The technology that we had nobody wanted to or thinking about it outside Florida, because everybody had didn't have these kinds of catastrophe and disasters occurring before now they do.
Speaker Change: And if the premium under management.
Speaker Change: On our platform.
Speaker Change: <unk> already seen the leverage we're getting just by growing.
Speaker Change: Imagine it went from one 2 billion to two and a half or $5 billion 5 billion is by the time, we get there will be about.
Speaker Change: 4% market share throughout the U S.
Speaker Change: Very very small, but a huge opportunity so that kind of gives you an idea as to the.
Speaker Change: The time, we're looking at here does that help.
Michael Phillips: Does that help? It does. Yeah. And in the first part of your answer, I think it sounds like you're referring to kind of the overall homeowners market of, you know, that's how your tech can help the market. So when you're TAM, you're referring to the size. Yeah, your HCI is a small part of that. Okay, good. Thank you.
Speaker Change: It does yes.
Speaker Change: In the first part of your answer I think it sounds like you're referring to kind of the overall homeowners market.
That's how your tech can help the market so when your Tam you're referring to the size of the homeowners industry.
Speaker Change: Cool.
Speaker Change: Sure Joe.
Speaker Change: Small part of that.
Speaker Change: Okay. Good thank you.
Mark Harmsworth: I guess maybe one more for Mark. When you talked about that kind of, I don't know what you call it, the adjusted or the combined ratio, a little bit better in the first half than 75%, and maybe closer to 75% in the second half of the year.
Speaker Change: I guess, maybe one more for mark.
When you talked about that kind of a I don't know what you call. The adjusted the core combined ratio a little bit better in the first half and 75% a little bit and maybe closer to 75 in the second half.
Speaker Change: In the second half of the year.
Mark Harmsworth: Make sure I heard that correctly, first off. And then if I'm looking at the right numbers, if we can, the first half of 2024 was around 67%. Am I comparing the same numbers that you're talking about, Mark? Yeah, yeah. And to your question about 2025, the 75% that I referred to as a normalized combined ratio, think of that as Q3 and beyond next year. After, on those citizens' assumptions, you've got full reinsurance in there, commissions on renewals, that type of thing. So that's like the sort of fully loaded Q3 number. That's where the 75% number comes from.
Speaker Change: Sure I heard that correctly first off and then.
Speaker Change: If I if I'm looking at the right numbers. If we can on the first half of 2024 was around 67 is that am I comparing the same numbers that you're talking about mark.
Speaker Change: Yeah, Yeah and the.
Speaker Change: To your question about 2025.
Speaker Change: The 75% that I referred to as a normalized combined ratio think of that as Q3 and beyond next year. After on those citizens assumption that you've got full reinsurance in their commissions on renewables that type of thing so as like the sort of fully loaded Q3 number that's where the 700.
Speaker Change: 5% number comes from the reason it will be more likely in the mid sixties in the first half of the year.
Mark Harmsworth: The reason it will be more likely in the mid-60s in the first half of the year is because, again, of that temporary impact of the citizens' assumptions where you've got premium coming in. You have loss expense, obviously, but no reinsurance, no PAC, and so your combined ratio is just going lower. So that's how you get 60%, 65% in the first half of the year, 75% once that normalizes out.
Speaker Change: Is because again of that of that Tam.
Speaker Change: Temporary impact.
Speaker Change: Of the citizens assumptions, where you've got <unk>.
Speaker Change: Premium coming in you have loss expense, obviously, but no reinsurance no pack and so youre. Your combined ratio is just going lower so that's that's how you get 60, 65% in the first half of the year, 75% once that normalizes out and by the way the normalized combined ratio for the full year 2000.
Mark Harmsworth: And by the way, the normalized combined ratio for the full year, 2024, was about 72.5%, 73%. Does that help? Thank you. Yeah, that's perfect. Yeah, thank you. I appreciate it. Thanks.
24 was about 72 and a half 73, so yes that does that help thank you.
Speaker Change: That's perfect. Thank you think necessarily I appreciate it.
Speaker Change: Thanks.
Speaker Change: Okay.
Mark Hughes: Thank you. Our next question. Mark Hughes with Truist Securities. Yeah, thank you. Good afternoon. Paresh on the IGZIO.
Speaker Change: Thank you. Our next question is coming from Mark Hughes with Truest Securities. Your line is live.
Speaker Change: Yes, Thank you and good afternoon parish on Z O.
Pareshbhai Patel: I assume a good The good result for Exeo, at least to a start, would be to have some sort of flagship or early customer, if the idea here is you're going to use this technology to help other insurance companies. Step in that direction, seems like it would really highlight the opportunity. What are the odds? What's the chance? What's the visibility for a Page PAGE of NUMPAGES www.verbalink.com Page PAGE of NUMPAGES Yeah, Mark, I think you're right, it would help. The interesting thing of where we've developed these companies through is Egggeo, to my comment is solidly profitable, no immediate needs of capital, no hurricane volatility, and earnings are growing at a rapid clip.
Speaker Change: I assume.
Speaker Change: Good.
Speaker Change: A good result for <unk>.
Speaker Change: At least to start would be to have.
Speaker Change: I'm sort of flagship our early.
Speaker Change: Customer if the idea here is you're going to use this technology to help other insurance companies.
Speaker Change: Stepping that right or in that direction. It seems like it would really highlight the opportunity.
Speaker Change: What are the odds, what's the chance that the visibility for.
Speaker Change: Got to happen in the near to medium term and is that a right way to look at it.
Mark Glover: Yeah, Mark I think you are right.
Speaker Change: Would help.
Speaker Change: The interesting thing of where we take where we've developed these companies too.
Speaker Change: Ex U.
Speaker Change: So my comment is solidly profitable no meeting needs of capital no hurricane volatility and earnings are growing at a rapid clip all of these things are true with only having to for HCI group controller carriers as customers.
Pareshbhai Patel: All of these things are true with only having the four HCI group controlled carriers as customers. So even if Exeo doesn't get any new customers, just by the leverage and the things they're doing for their four existing carriers is going to give them a very, is going to create a very positive future for them. Right?
Speaker Change: So even if it doesn't get any new customers.
Speaker Change: Just by the leverage and the things they're doing four therefore existing carriers.
Is going to give them a very.
Speaker Change: Going to create a very positive future for them right.
Speaker Change: If you now.
Pareshbhai Patel: set it up correctly so you can expand to other catastrophe active states, California being obviously the one that comes to mind at the moment. Louisiana being another one, but if you start adding these states Axios future could be even brighter, right? And the beauty of what we're doing in separating this thing out Exit technology is needed in those places. HCI Group, on the other hand, may make different decisions as to whether it wants to operate in Texas or Louisiana or California, right? Now you're separating those two decisions. So while HCI Group, for example, may not want to operate in Texas, there are plenty of carriers in Texas who could use the help, or right now in California, who could use the help to underwrite the business better.
Speaker Change: Set it up correctly, so you can expand to other.
Speaker Change: Catastrophe.
Active states, California, being obviously, the one that comes to mind at the moment.
Speaker Change: Louisiana being another one but if you start adding these states eggs.
Speaker Change: <unk> future could be even brighter right.
Speaker Change: And the beauty of what we're doing in separating this thing out.
Speaker Change: Agco's technology leader in those places HCI group on the other hand may make different decisions as to whether it wants to operate in Texas, or Louisiana, or California, right now youre separating those two decisions. So while HCI group for example may not want to operate in Texas there.
Speaker Change: There are plenty of carriers in Texas, who could use the help or right now in California, who could use the help to underwrite the business better. So that's why we're making the separation.
Pareshbhai Patel: So that's why we are making this separation, so that You're not limited to only helping capital that is beneficial to HCI.
Speaker Change: So that.
Speaker Change: Youre not limited to only.
Speaker Change: Helping capital that is.
Speaker Change: And official to HCI group.
Pareshbhai Patel: Could this involve fronting as well? All right. I don't necessarily know that it, you know, again, we'll see how this evolves. But so far, we, you know, things that we've never done, we've never done fronting before in the sense of where our technology has always had a much higher bar to clear than lots of other people who tout technology. is that Because so far, every time we've done something, we've put our capital at risk. and actually entirely our capital risk and not anybody else's. We have produced these results because we have been very, very mindful that the technology is going to produce a positive outcome for the capital.
Speaker Change: But because this is my favorite.
Speaker Change: Fronting as well.
Speaker Change:
I don't actually know that.
Speaker Change: Again, we'll see how this evolves, but so far we.
Speaker Change: Things that we've never done we've never done fronting before and a sense of.
Sure.
Speaker Change: Where our.
Speaker Change: <unk> has always.
Speaker Change: Had a much higher bar to clear then.
Speaker Change: Lots of other people, who tout technology is.
Speaker Change: Is that.
Speaker Change: Because so far every time, we've done something we've put our capital at risk.
Speaker Change: Actually entirely our capital risk and not anybody else's.
We have produced these results because we have been very very mindful of the <unk>.
Speaker Change: Acknowledges going to produce a positive outcome for the capital.
Pareshbhai Patel: right? When you get into things like fronting, etc, you are more focused on how shall I put this? distribution and financial engineering than actually underlying profitability. Right. So Yes, as I'm talking this through a different way of looking at it is HCI Group. has been fronting. 100% of the time. And Mark just gave you the numbers that this has resulted in, right? I'm sure there are lots of friendly companies who would like their clients to have these kinds of results. Yep. Yeah. Yep, I hear you.
Speaker Change: Right.
Speaker Change: When you get into things like fronting etc.
Speaker Change: You are more focused on.
Speaker Change: How shall I put this.
Speaker Change: Distribution and financial engineering that actually underlying profitability.
Speaker Change: So.
Speaker Change: Yes, as I'm talking to us through a different way of looking at it is HCI group.
Speaker Change: Has been fronting.
Joe: Hey, Joe.
Speaker Change: 100% of the time.
Speaker Change: And Mark just gave you the numbers that this has resulted in rain.
Speaker Change: Yeah.
Speaker Change: I'm sure there are lots of friendly companies would like their clients to have these kinds of results.
Speaker Change: Yeah Yeah.
Speaker Change: Yes, I hear you.
Mark Harmsworth: The fourth quarter, the very good gross loss ratio, any perspective, you know, I think storms tend to knock down some attritional losses. variability in the weather, all of that. How much do you think those other factors helped that loss? I mean, it might have helped. Mark, it's Mark. It might have helped a bit. But I think, you know, if you look at claims frequency, which is a big driver, obviously, of the loss ratio, claim frequency is just it's coming down. It was 25% lower in 2023 than 2024. It was 12.5% lower in 24 than 23.
Speaker Change: <unk>.
Speaker Change: Fourth quarter very good gross loss ratio.
Speaker Change: Any perspective.
Speaker Change: I think our.
Speaker Change: Storms tend to knock down some attritional losses.
Speaker Change: You get some variability in the weather all of that.
Speaker Change: How much do you think those other factors helped that loss ratio.
Speaker Change: I mean, it might help.
Mark Glover: Mark it's mark it might've helped a bit but I think.
Mark Glover: If you look at claims frequency, which is a big driver obviously of the loss ratio claim frequency is just its coming down it was 25% lower in 2023 and 2024. It was 12, 5% lower in 'twenty four 'twenty three.
Mark Harmsworth: And if you factor out weather, it's a little bit different, but not a lot. I mean, even if you take weather out, Claims frequency is coming down, litigation propensity is coming down, severity is going up just a bit, and it's all moving in the right direction and it is not a weather phenomenon.
Mark Glover: And if you factor out whether it's a little bit different but not a lot I mean, even if you take weather out.
Mark Glover:
Mark Glover: Claims frequency is coming down litigation propensity is coming down.
Mark Glover: Severity is going up but just a bit.
Mark Glover: And.
Mark Glover: We thought it's all moving in the right direction and it is not it is not a weather phenomenon.
Karin Coleman: And Mark, if I could add to that commentary about... How things are going. We talked about the efficiency that technology is showing in terms of depopulating citizens, making sure we only pick... policyholders who want to come with us and stay with us. There's another aspect to it that I acknowledge you're also doing. when we did the depopulations in late 23. You know, we clearly had, we clearly understood the loss ratios of our existing business. You know, we were a little bit concerned about how the takeout book would perform. And so I'm sure we I think Mark talked about it in quarters past.
Speaker Change: And Martin just if I could add if I could add to that commentary about.
Mark Glover: How things are going.
Mark Glover: We've talked about the efficiency the technology is showing in terms of the populating citizens, making sure we only pick.
Mark Glover: Policyholders, who want to come with us and stay with us.
Mark Glover: Theres other aspects to the technology also doing.
Mark Glover: When we did the populations in late 'twenty three.
Mark Glover: We've clearly had we can understood the loss ratios of our existing business.
Mark Glover: We were a little bit concerned about.
Mark Glover: How the take up could perform.
Mark Glover: And so I'm sure we.
Mark Glover: I think mark talked about it.
Mark Glover: The quarter's past.
Karin Coleman: We we were a little bit more conservative in our reserving for those takeout books. I think. What the fourth quarter results and everything else have sort of started showing is those takeouts that we're doing are almost as good as the existing book that we already have in place, right? This is a new phenomenon that a few years ago we would have said could never happen, right? Yeah, the loss ratio on that assumed business... The difference between that and the legacy business, if you will, is indistinguishable, which we did not assume that at the start. That's part of what you're seeing.
Speaker Change: We were a little bit more conservative in our reserving for those take out books.
Mark Glover: <unk>.
Mark Glover: What the fourth quarter results and everything else have sort of started showing is those take us that we're doing.
Mark Glover: Our.
Mark Glover: Almost as good as the existing book that we already have in place right.
Mark Glover: This is a new phenomenon that we didn't.
Mark Glover: Originally a few years ago, we would've said could never happen right yeah, yeah, the loss ratio on that assumed business.
Mark Glover: The difference between that and the and the <unk>.
Mark Glover: Legacy business. If you will is in indistinguishable, which we didn't we did not assume that at the start.
Mark Glover: And Thats.
Mark Glover: The part that's part of what Youre seeing in the <unk>.
Karin Coleman: Yeah, and the fact that it's doing that is attributable to nothing other than technology. So this is why, as you start to look at how all this stuff is working. not in theory, it'll work someday in the future. It's showing it's showing right there in the combined ratio, which effectively Karin's point is dropping by about 10% in the course of a year. All the insurance guys would tell you that if you can improve by two or three points in a year. You should be thrilled, right? We seem to be effortlessly doing it by 10%, and the tone is just matter of fact, as opposed to doing laps around the boardroom table.
Mark Glover: <unk> that is doing that.
Mark Glover: Uh huh.
Mark Glover: Is attributable to nothing other than technology.
Mark Glover: So this is why as you start to look at how all of this stuff is working.
Mark Glover: Not in theory, it'll work someday in the future.
Mark Glover: It's showing right there in the combined ratio.
Mark Glover: Which effectively.
Mark Glover: To Karen's point is dropping by about 10 points, 10% in the course of the year.
Mark Glover: All the insurance guys would tell you that if you can improve by two or three points in a year.
Mark Glover: You should be thrilled.
Mark Glover: Alright.
Mark Glover: We seem to be effortlessly doing it by 10%.
Mark Glover: The tone is just matter of fact as opposed to <unk>.
Speaker Change: Doing laps around the.
Mark Glover: Around the boardroom table.
Karin Coleman: Does that open up the possibility for additional? as well. for future takeouts. Yes, it does. Right.
Mark Glover: Does that <unk>.
Mark Glover: Open up the possibility for additional take out so if you're doing as well on.
Mark Glover: You don't need them.
Mark Glover: Presumably you can kind of mine a little.
Mark Glover: Lower strata or higher strata. However, you want to look at it.
Mark Glover: Or for future Takeouts is that fair.
Mark Glover: Yes, it does right and.
Karin Coleman: And look, one of the things... that we are doing because we also happen to be. in a state. where the legislature made the reforms and then has kept a very steady regulatory environment. A Stable Environment is that we can step up and offer alternatives to people to go to the private market. And I will tell you, it's an incredible achievement, and this is for the whole state of Florida, that even after three hurricanes, right, the insurance, the private insurance industry stepped up. Citizens actually shrank in the fourth quarter, which is after the hurricanes, right? And there is talk of it, and to your question, we're going to shrink citizens even further.
Mark Glover: Look one of the things.
Mark Glover: That we are doing because we also happen to be.
Mark Glover: In a state where.
Mark Glover: Where the legislature made the reforms and then has kept a very steady.
Mark Glover: The regulatory environment.
Mark Glover: A stable environment.
Mark Glover: Is that we.
Mark Glover: We can step up.
Mark Glover: <unk> of all charges of people to go to the private market.
Mark Glover: I will tell you it's an incredible achievement and this is for the whole state of Florida that even after three hurricanes right.
Mark Glover: The insurance and private insurance and has stepped up.
Mark Glover: And citizens actually shrank in the fourth quarter, which is after the hurricanes right.
Mark Glover: And there is talk of it.
Mark Glover: To your question, we are going to shrink citizens even further.
Karin Coleman: That is what a stable, healthy market looks like. And it only suddenly contracts itself when you compare it to what may be about to happen in California, right? Good regulations matter, and when you have them. The private industry usually responds in a very, very positive manner, as it has done here.
Mark Glover: Right.
Mark Glover: That is what a stable healthy market looks like and it only suddenly contracts itself. When you compare it to what may be about to happen in California.
Mark Glover: Right.
Mark Glover: Good regulations matter and.
Mark Glover: And when you have them.
Mark Glover: The private industry regional response in a very very positive manner as it has done here.
Pareshbhai Patel: If I might slip in one more, Paresh, what do you think about the reinsurance market outlook in the wake of California wildfires?
Mark Glover: If I might slip in one more paresh, what do you think about the.
Mark Glover: Reinsurance market outlook in the wake of.
Mark Glover: The California wildfires.
Pareshbhai Patel: I'll give you a tongue-in-cheek answer because we were in Bermuda in mid-January. I think everybody wants to worry and discuss about what's going to happen in California. We are the boring insurance guys from Florida, right, where what we said we were going to do we did, the losses are contained, the numbers we said we would mark and estimated are the numbers that are coming through. Like I said, everybody looked at us and said we know exactly how you behave, we know exactly what the rates are going to do, everything else. We like you as customers, we have to solve our California problem.
Mark Glover: I'll give you a tongue in cheek answer because we were in Bermuda.
Mark Glover: In mid January.
Mark Glover: I think.
Mark Glover: Everybody wants to worry and discuss about what's going to happen in California.
Mark Glover: The boring insurance skies from Florida, right, where.
Mark Glover: What we said we were going to do we did the losses are contained numbers, we said we would.
Mark Glover: Estimated other numbers that are coming through.
Mark Glover: No.
Mark Glover: Like I said, everybody looked at as I said.
Mark Glover: We know exactly how you behave we know exactly what the rates are going to do everything else, we'd like those customers, we have to solve a california problem.
Mark Glover: Uh huh.
Pareshbhai Patel: I think that sentiment says it all, right?
Mark Glover: Those that sentiment says it all right, California is now the talking point of industry, we seem to be.
Pareshbhai Patel: California is now the talking point of the industry. We seem to be... The Boring Florida Guys, and I love that, by the way, right?
Speaker Change: Boring, Florida guys.
Speaker Change: I love that by the way right first time, it's happened in 18 years and it's always a good thing when it does.
Pareshbhai Patel: First time it's happened in 18 years, and it's always a good thing when it does.
Operator: Thank you very much. Thanks, yep.
Speaker Change: Thank you very much.
Speaker Change: Yep.
Speaker Change: Thank you.
Pareshbhai Patel: We have reached the end of our question and answer session, so I'll now turn the call back over to Mr. Patel for any closing comments. On behalf of our entire management team I would like to thank our shareholders, employees, agents, and most importantly, our policyholders for their continued support. We look forward to updating you with our progress in the coming months. Thank you. Thank.
Paresh Patel: We have reached the end of our question and answer session. So I'll now turn the call back over to Mr. Patel for any closing comments.
Speaker Change: Okay.
Speaker Change: On behalf of our entire management team.
Speaker Change: I would like to thank our shareholders employees agents and most importantly, our policyholders for their continued support.
Speaker Change: We look forward to updating you with our progress in the coming months. Thank you.
Speaker Change: Thank you.
Operator: Ladies and gentlemen, this does conclude today's conference and you may disconnect your lines. We thank you for your participation.
Speaker Change: Gentlemen, this does conclude today's conference and you may disconnect. Your lines at this time and we thank you for your participation.