Q3 2025 Slide Insurance Holdings Inc Earnings Call
Speaker #4: Greetings and welcome to the Slide Insurance Holdings, Inc. third quarter 2020 Earnings Call . At this time , all participants are in a listen only mode .
Speaker #4: A question and answer session will follow the formal presentation . If anyone should require operator assistance , please press Star Zero on your telephone keypad .
Speaker #4: And as a reminder , this conference is being recorded . It is now my pleasure to pass the call over to the slide team .
Speaker #4: Thank you . You may begin .
Speaker #5: Thank you and good afternoon . With us today are your hosts , Bruce Lucas , Chairman and Chief executive officer of Slide , and Jesse Schulz , chief Financial Officer .
Speaker #5: But now everyone should have access to our shareholder letter , which was released prior to this call and which may also be found on our website at IR insurance.com .
Speaker #5: Before we begin our formal remarks , I need to remind everyone that part of our discussion today may include forward looking statements , which are based on the expectations , estimates and projections of management regarding the company's future performance and anticipated events or trends and other matters that are not historical facts .
Speaker #5: The forward looking statements in our discussion are subject to various assumptions , risks , uncertainties and other factors that are difficult to predict and which could cause actual results to differ materially from those expressed or implied in the forward looking statements .
Speaker #5: These statements are not guarantees of future performance and therefore undue reliance should not be placed upon them . Refer all of you to our shareholder letter and recent filings with the SEC for more detailed discussion of the risks and uncertainties that could impact the future operating results and financial condition of slide .
Speaker #5: Our statements are , as of today , November 5th , 2025 , and we undertake no obligation to update any forward looking statements we may make except as required by law .
Speaker #5: In addition , this call is being webcast in an archived version will be available shortly after the call ends on the Investor Relations portion of the company's website at insurance.com .
Speaker #5: With that , I'd now like to turn the call over to chairman and CEO Bruce Lucas . Please go ahead .
Speaker #6: Thank you , and welcome to our third quarter 2020 earnings call . We appreciate your continued interest in slide and are excited to be speaking with you today .
Speaker #6: Before we discuss our results , I want to take a moment to thank all of our employees for their tireless effort to make .
Speaker #6: Slides successful . I am extremely proud to work with you and truly appreciate your sacrifice for our company . It's a great time to be a slide .
Speaker #6: The third quarter was our best quarter in the company's history . As we delivered superior top and bottom line growth . Our performance was nothing short of remarkable across the board , and we expect that momentum to carry into the fourth quarter and 2026 .
Speaker #6: For the quarter , we had a meaningful acceleration of gross premiums written , which increased by 33.8% year over year to $463 million .
Speaker #6: We also expect to further grow gross premiums written in the fourth quarter compared to the third quarter . In addition to our solid top line results , our net income in the third quarter set a new record at slide .
Speaker #6: Our net income more than Sextupled to $111 million , compared to $17.6 million in the prior year quarter . Along with net income .
Speaker #6: Third quarter return on equity was strong at 12.1% in the quarter . Year to date , slide has produced 39.2% return on equity , despite a large capital raise in the second quarter .
Speaker #6: From our initial public offering . Third quarter earnings per diluted share is $0.79 . I have consistently stated that we take a conservative approach to our reserving philosophy .
Speaker #6: We believe that it is better to be conservative on a quarterly basis until reserves have had time to season , and more fully develop .
Speaker #6: We are at the point where we are gaining much more clarity into our reserve development trends , and we believe our core loss ratios are more accurately reflecting their performance in the third quarter .
Speaker #6: Our consolidated loss ratio was 13.7% at 77% reduction year over year . All of these factors contributed to the best quarter in the company's history and produced a 48.5% combined ratio , compared to a 94.3% combined ratio year over year .
Speaker #6: Our third quarter performance is a clear testament to the power of the solid business model and our long term value proposition that we have built over the past several years .
Speaker #6: As we have consistently noted , we fundamentally operate our business with a long term mindset and have to date focused on bottom line earnings and ROE , backed by our decades of experience , a wealth of data and our proprietary focused technology .
Speaker #6: We believe our team knows how to most effectively underwrite homeowners policies to efficiently manage our portfolio . Our concentration of risk and our reinsurance expense to optimize profitability .
Speaker #6: That laser focus on underwriting in concert with the benign hurricane season enabled us to once again deliver superior loss and combined ratios in the quarter , along with another quarter of favorable prior year development .
Speaker #6: Our growth model includes both voluntary business and citizens , take outs . We typically analyze both opportunities to find the best combination of business that maximizes our ROE .
Speaker #6: During the quarter , we participated in one small assumption from citizens that generated over 22 million in gross premiums written while our new business voluntary premiums , set a new quarterly record for slide with over 65 million of gross premiums written .
Speaker #6: Our growth has favorably impacted our balance sheet , and I expect that slide will be the first and only homeowners insurer in Florida to cross $1 billion in shareholders equity , and it will happen in the fourth quarter of 2025 .
Speaker #6: We have carefully and thoughtfully created the most successful coastal specialty insurer in the country, as evidenced by our industry-leading performance. Our balance sheet is just as impressive as our earnings to date.
Speaker #6: Slide does not have an external quota share , and our net written premium to Consolidated Capital is approximately 1 to 1 , and our debt to capital ratio is only 3.5% .
Speaker #6: Moving forward , we intend to use our balance sheet and profitability to accelerate growth beginning in 2026 . Near-term growth is a key driver to long term success , and we are at a stage in our life cycle where growth initiatives are becoming more of our central focus .
Speaker #6: It will take time to develop , launch and scale new growth initiatives , but it is important to lay the foundation for growth in the near term .
Speaker #6: There is a cost to scaling top line as we invest in systems and personnel , but we feel that the investment will pay dividends as we move forward .
Speaker #6: Even if it has an impact to our bottom line . In the short term . I noted on our last call that we were reserving underwriting capacity in anticipation of significant fourth quarter take outs of citizens policies in Florida .
Speaker #6: I am very pleased to note that for the month of October , we assume 60,186 policies from citizens . We continue to outperform the broader market on our ability to underwrite citizens policies , as evidenced by the October take out , which was the largest policy assumption in the Florida market .
Speaker #6: While we only assume appropriately underwritten policies , these take outs typically have superior combined ratios , meaning they should be further accretive to our net income .
Speaker #6: Moving forward . Our decision to take a conservative underwriting approach in the second quarter in order to save underwriting capacity for the fourth quarter , was to right decision , and the company is in a substantially better position as we approach year end .
Speaker #6: While we expect growth in policies in the fourth quarter, we are also making solid progress with respect to expanding our footprint in additional states.
Speaker #6: We experienced substantial growth in South Carolina during the third quarter . As we continue to expand on this coastal opportunity . We also filed for products and rates in New York and New Jersey .
Speaker #6: While timing is subject to regulatory approval . We are hopeful that we will begin writing bipedal tailored products in those states in the first half of 2026 , which is consistent with our original timeline .
Speaker #6: We are also making solid progress with our California launch using excess and surplus lines products . Given our strong results , we believe that the market is not recognizing the fair value of our company .
Speaker #6: In response, our Board of Directors authorized a $75 million repurchase program at the end of August, which we used in the third quarter to repurchase over 1.4 million shares at an average price of $14.22. I am confident this will produce a meaningful ROE for all shareholders.
Speaker #6: Our prior share repurchase authorization has approximately $55 million remaining . Given our confidence in our long term strategy , the board today increased our authorization to $120 million , with $100 million in remaining authorization .
Speaker #6: That will be available to repurchase shares as a result , we plan to aggressively buy back stock until we believe the share price is trading in a manner that reflects our fair value , given our strong balance sheet and our acceleration in earnings , we have abundant capital to return capital to shareholders .
Speaker #6: If the market value is understated while still executing on our core business plan , including growth on the back of our success thus far in the October Citizens Takeouts .
Speaker #6: We are currently expecting another meaningful amount of Takeouts to be assumed in November and December . Post November , we are planning to provide an update on our expectations for our fourth quarter 2020 results .
Speaker #6: As the composition of our book is changing . This guidance will be very important for investors in updating their outlook . Additionally , we expect to provide our outlook for 2026 when we report our fourth quarter earnings .
Speaker #6: As mentioned in our S-1 , we remain steadfast in our commitment to strong corporate governance and transparent oversight , particularly with respect to executive compensation .
Speaker #6: In preparation for the 2026 proxy season . We have engaged compensation advisory partners as our independent compensation consultant to ensure our executive pay program aligns with prevailing executive compensation parameters and best practices .
Speaker #6: The company is currently exempt from , say , on pay , but I believe we should always solicit investor feedback on compensation issues .
Speaker #6: Consistent with our focus on good governance, we also expect to incorporate investor feedback into our executive compensation framework and long-term strategy.
Speaker #6: Before turning the call over to Jesse , I want to take a minute to touch on our corporate structure . The past several years have been nothing short of a 24 over seven grind to grow slide from an idea in my mind to fruition .
Speaker #6: We have scaled from startup in a manner that no one outside of our team thought was possible . We believe that there is tremendous opportunity ahead of us , and it will take a tireless effort by our team to continue to execute in the manner in which we are accustomed .
Speaker #6: To that end , we have made adjustments to our corporate structure to better align our talents and resources , enabling us to execute our business plan more effectively .
Speaker #6: We are pleased to announce that Charles Powell has been promoted to Chief Revenue Officer and will oversee all aspects related to revenue , including sales , underwriting , agency services and product .
Speaker #6: Shannon Lucas is stepping down as chief risk officer and Matt Larson has been promoted to CRO to fill this role . Matt will oversee all aspects of risk management and our multibillion dollar reinsurance program .
Speaker #6: Meanwhile , Shannon will now serve as our president and chief Operating Officer , which allows us to consolidate all operational aspects under her leadership .
Speaker #6: In addition , Andy Amiridis will join our team effective December 1st , as our chief Financial Officer and Executive Vice President . Andy has over 30 years of experience and has held key roles at Pricewaterhouse , Coopers , Chubb , AIG , Argo , Kemper and Ameriserv and has significant public market experience .
Speaker #6: Jesse will remain with slide until March 2nd to help facilitate a smooth and seamless transition . I want to thank Jesse for his partnership over the past several years , which of course included helping to bring us public earlier this year .
Speaker #6: Jesse is one of the best insurance executives I've ever worked with and is a brilliant problem solver and strategist . Over the past three years , he has been instrumental in our success and I wish him all the best .
Speaker #6: Moving forward . We appreciate your continued interest in support of Sid . And with that , I'll now turn the call over to Jesse Shore to provide some color on our very successful third quarter .
Speaker #7: Thank you , Bruce , and good afternoon to everyone on the call . Let's go right into our third quarter results for the third quarter of 2025 .
Speaker #7: Gross premiums written were 463.4 million , a 34% increase compared to 346.3 million in the prior year period , driven by the acquisition of additional policies from citizens as well as consistent year over year renewal rates of existing written policies , including citizens policies assumed in prior quarters and a strong increase in commercial residential premiums at the end of the quarter , we had approximately 351,700 policies in force , up 28% from one year ago and up modestly from June 30th .
Speaker #7: As Bruce mentioned , we kept policies in force , relatively consistent throughout the quarter to preserve growth capacity for this quarter's citizens . Takeouts of which we assume 60,186 policies in October .
Speaker #7: This provides us a natural opportunity to touch briefly on how citizens assumptions work . It's important to note that while we may assume a number of citizens policies in a given month , the policies all have different renewal dates , assumed premiums , and renewal premiums .
Speaker #7: As Bruce mentioned , we plan to provide an update post November on our expectations for fourth quarter 2025 . After we have assumed these policies .
Speaker #7: Total revenue of 265.7 million increased 33% compared to 200.1 million in the prior year period , primarily attributable to an increase in net premiums earned due to the assumption of policies from citizens and increased renewals of existing policies , losses and loss adjustment expenses incurred .
Speaker #7: Net were 33.2 million and there were no incurred losses from significant storms . This was compared to 111.7 million , which was inclusive of catastrophe losses of 55.8 million from Hurricanes Debbie and Helene in the prior year period .
Speaker #7: This decrease in the quarter was primarily due to lower than expected payments on losses incurred in earlier quarters of the current year , as well as prior years .
Speaker #7: While the third quarter of 2025 was a benign weather season for hurricanes and convective storms , the company continues to reserve for losses conservatively .
Speaker #7: Our loss ratio for the third quarter of 2025 improved to 13.7% compared to 60.4% in the prior year period . Third quarter loss ratios included 33.5 million of favorable development of prior accident years , compared to 1.4 million of adverse development in the prior year period .
Speaker #7: Policy acquisitions and other underwriting expenses in the quarter were 36.4 million , compared to 22 million in the prior year period . The increase was primarily attributable to greater policies in force on a year over year basis , as well as fewer premiums earned on citizens policies in their assumption period .
Speaker #7: G&A expenses were 45 million , compared to 38 million in the prior year period , due primarily to the growth in staffing to support the company's increased policies in force .
Speaker #7: Our combined ratio improved to 48.5% compared to 94.3% in the prior year period , primarily as a result of increased net premiums earned from growth of policies in force .
Speaker #7: A decrease in cat losses from non-hurricane weather activity and the release of reserves related to non-cat events . Net income more than Sextupled to 111 million compared to 17.6 million in the prior year period .
Speaker #7: Diluted earnings per share for the third quarter of 2025 was $0.79 . Return on equity was 12.1% , compared to 4.9% in the prior year period , driven by increased earnings in the third quarter of 2025 due to reduction in losses incurred as of September 30th , 2025 .
Speaker #7: We have generated a return on equity of 39.2% year to date . Turning to our balance sheet , as of September 30th , 2025 , we had cash and cash equivalents of 861.6 million .
Speaker #7: An additional 539.9 million of restricted cash held for the benefit of our captive reinsurance cells . Invested assets of 478.6 million and long term debt of 35.0 million .
Speaker #7: In the third quarter , we repurchased approximately 1.4 million shares at a weighted average price of $14.22 . There is approximately $100 million available under our expanded repurchase program .
Speaker #7: We believe our capitalization and liquidity will enable the company to continue to profitably grow our business over the long term . With that , I thank you for your time and we will now open up the call for Q&A .
Speaker #7: Operator .
Speaker #4: Thank you . We will now be conducting a question and answer session . If you would like to ask a question , please press star one on your telephone keypad .
Speaker #4: A confirmation tone will indicate that your line is in the queue . You may press star two to remove yourself from the queue .
Speaker #4: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment, please.
Speaker #4: While we pull for questions . And the first question comes from the line of Alex Scott with Barclays . Please proceed with your question .
Speaker #8: Hey , thanks for taking the question . So results look really strong . It seems like you've got some good growth opportunities . Can you talk to me about the increased authorization on the buyback and just how you're thinking about the trade off between the growth opportunities you have and , you know , obviously , you know , view that the stock's trading below its intrinsic value at this point .
Speaker #6: Yeah that's a great question . And it's something that we've been really paying attention to particularly throughout the third quarter . We have abundant capital and our earnings are expanding .
Speaker #6: Our growth is expanding . We have more than enough capital to repurchase shares . If the share price is trading below fair value , while still executing on every aspect of our business plans , including accelerated growth .
Speaker #6: So if we have the abundance of capital and we're trading below our fair value , it's a great way to return ROE to our shareholders .
Speaker #6: And we are not afraid to aggressively repurchase stock until the share price normalizes and arrange that we feel reflects the intrinsic value of the company .
Speaker #8: Yeah , understood . Okay . Next one , could you talk about the environment in Florida a bit ? I mean , you know , we've we've heard about , you know , progressive doing so .
Speaker #8: Well they had to . I think refund some you know premiums back to policyholders . I know that's auto not home but you know are you seeing any of the national carriers or any of the Florida specific carriers beginning to heat up in terms of competition ?
Speaker #8: Certainly . Still getting a lot of growth , particularly with the citizens . But I'm just trying to understand how we should think about the more organic piece of the growth within Florida over the next couple of years .
Speaker #9: Yeah , we're not really seeing the nationals here at this point in time . I'm aware that progressive refund , but you're correct .
Speaker #9: That's auto . That's not our line of business . And I'm not sure the details behind why they did that . And as far as we look at market in competition in Florida , it feels very stable compared to what it was last quarter .
Speaker #9: And last year . There are some smaller carriers with very limited capital that are out there . They can't really write a lot against a very small capital base .
Speaker #9: We're not really seeing them in any meaningful way . When you look at our voluntary premiums that we wrote in Florida , I mean , it was a record voluntary production quarter for us .
Speaker #9: Same with South Carolina . So there's still an abundant opportunity to expand top line via new business , organic sales . We've got a great rate structure reputation , and we have the best balance sheet .
Speaker #9: We believe in the industry . All those are attractive features to our agent force . And I'm just happy to report that the growth is continued to trend higher and above our internal expectations .
Speaker #8: Great . Thank you .
Speaker #4: And the next question comes from the line of Tommy Mac, joined with KBW. Please proceed with your question.
Speaker #10: Hey , good evening guys . You spoke a little bit there and in the prepared remarks about the growth opportunities and some of those other coastal markets outside of Florida .
Speaker #10: But beyond November , do you anticipate citizens takeouts will also remain a significant contributor to the growth opportunity into 2026 ?
Speaker #9: Yeah , I mean , there's there's still ample opportunity at citizens . But what we need to do is see what policies were actually assumed in the fourth quarter .
Speaker #9: So we're going to get some updated data from citizens . You know , within the next 30 days or so . We'll see what's there , what's left .
Speaker #9: There is still opportunity there . Obviously , the more policies that are removed , the lower the opportunity becomes . But , you know , we're very bullish about our fourth quarter assumptions .
Speaker #9: We're going to update the market on those statistics here in just a few weeks . But there's there's still growth opportunities there . But I think our focus is rightfully focused on expanding our voluntary distribution channels , products into new states as quickly as we can .
Speaker #9: We've spent the last three years growing and scaling the balance sheet , and we wanted to have a really an ambitious level balance sheet .
Speaker #9: We have that now running at a 1 to 1 net premium to consolidated Capital . It's pretty unheard of in Florida . Now it's time to shift into growth mode , which sounds kind of weird because we've grown in three years from zero to to our current numbers .
Speaker #9: But we do think there is a very large growth opportunity outside of Florida . And that's really what our focus is going to be on , is moving as we move into 2026 .
Speaker #10: Got it . And you mentioned that 1 to 1 ratio there of net written to to capital . Do you think that's the right number to to use going forward for you guys just to stay conservative perhaps as you expand outside of Florida , does that enable you to write at a higher premium leverage if you have more diversification , can you talk about how that number might trend ?
Speaker #9: Yeah , it's a very it's a it's an incredible number to have as a coastal specialty insurer . I mean , nobody has a number like that .
Speaker #9: It's just a hallmark of stability . When you have a really good balance sheet . But to answer your question , we can absolutely put more leverage on .
Speaker #9: But with our earnings profile and the ROE that we are generating , which are just absolutely incredible , we're going to have even more capital coming into the equation here in 2026 that we can use to grow and scale and maintain conservative writing ratio , leverage .
Speaker #10: Thanks , Bruce .
Speaker #4: Ladies and gentlemen , as a reminder , if you would like to ask a question , please press Star One on your telephone keypad .
Speaker #4: A confirmation tone will indicate that your line is in the queue . You may press star two to remove yourself from the queue .
Speaker #4: For anyone using speaker equipment , it may be necessary to pick up your handset before pressing the star keys . And the next question comes from the line of Paul Newsome with Piper Sandler .
Speaker #4: Please proceed with your question .
Speaker #11: Good afternoon . Thanks for the call . There's been a fair amount of discussion about tort reform having , if anything , a bigger effect than folks expected .
Speaker #11: And that in turn putting a little pressure on rates , fraud rates . Do you anticipate having to follow some of your peers and cut rates a little bit because of the tort reform ?
Speaker #11: And I guess , relatedly , what's going on with the inflation guard offsets ?
Speaker #9: Yeah . Good question , Paul . I mean , we've been steadily decreasing rates for the last two years . So that that trend is is still kind of intact .
Speaker #9: You know , you get a lot of variability to like this year . You look at the first nine months of 2025 . It's been a very light , severe convective storm season .
Speaker #9: You know , we haven't had really you know , any hurricane activity . Of course . So , you know that that is helping loss ratios a lot .
Speaker #9: But you also should expect that there will be a little bit more weather related losses as you move forward , because this year was such an aberration .
Speaker #9: We don't really see big rate decreases on the horizon at this time . A lot of the rate that we have is really driven by our reinsurance program .
Speaker #9: Now , if reinsurance rates , you know , go the way some people are expecting them to go , maybe that has an offset .
Speaker #9: But we buy more reinsurance than anybody else in the market . We buy 30 event coverage . You know , we're buying to a level well in excess of regulatory requirements .
Speaker #9: And as long as we have the expenses to justify the rate, I really don't see a meaningful move. So at this point, no, we don't have any plans for significant rate decreases because we've already taken down the rate.
Speaker #9: And we think that the market's relatively stable at this price point .
Speaker #11: But is there any inflation guard being booked through .
Speaker #9: Yeah .
Speaker #11: Sorry .
Speaker #9: Yes . We we are doing 5% on T.V. at renewal . It's important to mark your book appropriately . You know there are impacts on on rebuilding costs due to tariffs etc.
Speaker #9: . So we need to make sure that we are maintaining a portfolio that is in line with the inflationary pressures to rebuild the home .
Speaker #11: And then the gross written premium came in a little bit better than we expected this quarter . And I think last quarter there was talk about sort of a shift in where you were picking up policies within Florida that sort of reduced the average premium .
Speaker #11: Is there any sort of similar thing happening this quarter with a shift in kind , where you're picking up premiums versus maybe last quarter or something ?
Speaker #11: That's in there ? That's not just pure Tiff changes .
Speaker #9: Yeah , I mean , Paul , when you , you know , you have to look at our treaty date is June 1st every year .
Speaker #9: And so when we're looking at to Q , we've given projections to the reinsurers as to what our probable maximum loss statistics are going to look like , we wanted to be conservative in the second quarter .
Speaker #9: And not overshoot those projections out of the gate . It gives you no wiggle room as you move through hurricane season . Once we got through the two Q numbers , we took a harder look at what our trends look like .
Speaker #9: We had room for growth . We had record growth in the third quarter . We also saw a meaningful increase in commercial residential premium .
Speaker #9: And those have much higher average premiums than a personal lines policy . And so that contributed pretty significantly to the growth rate . And that is continuing into the fourth quarter .
Speaker #11: I appreciate the help , friends . Thank you very much .
Speaker #9: Thanks , Paul .
Speaker #4: And the next question is a follow up from Alex Scott with Barclays . Please proceed with your question .
Speaker #8: Hi . Thanks for taking the follow up . I wanted to ask about just the strength of the balance sheet comments you've made and , you know , one of the things we've seen , I guess even more broadly across the industry is a fair amount of favorable PYD from property , just in light of the benign season as well .
Speaker #8: And , you know , any comments you can make about I don't know whether it's the the Ebner levels in your reserves or anything else you could tell us about the way that you've been booking , you know , attritional losses , that gives you a .
Speaker #8: You know , confidence in making the statements you're making around the balance sheet strength .
Speaker #9: Yeah , that's a great question . You know , we're a relatively newer company . We're only really been on risk for three and a half years .
Speaker #9: And as a result of that we rely a lot on industry experience as we look at what our loss reserve should , should be booked at , as we've kind of gone through our lifecycle over the past three and a half years , we have , as I've stated , you know , numerous times , taken a very conservative approach to our reserving philosophy .
Speaker #9: We are at the point now where we are seasoning more , we have more clarity into the ultimate development of those losses . And wherever we feel like we are comfortable in terms of a pied release , we are go ahead and we're going to go ahead and do that .
Speaker #9: We did it in the second quarter a little bit. There was a little over $30 million pre-tax that was released in the third quarter.
Speaker #9: As we continue to age out the prior quarters and prior years , we're going to take a harder look at where the reserves are , and we'll mark the book accordingly .
Speaker #9: But it's been nothing but a favorable trend , really for us over the past several years . And reserve releases as we move into the the end of each calendar year has been a pretty normal phenomenon .
Speaker #9: At slide . Did it last year ? Did it ? We're doing it again this year and that's really a reflection of a very conservative reserve profile .
Speaker #8: Yeah . Understood . That makes sense . Just as a housekeeping item , could you tell us what the cats were if there were any this quarter ?
Speaker #8: I just didn't see it in the shareholder letter . I wanted to make sure I had that .
Speaker #9: Yeah . This was a cat free quarter , which is our favorite type of quarter .
Speaker #8: Yep . Okay . Thank you .
Speaker #9: Thank you .
Speaker #4: There are no further questions at this at this time . And that concludes the question and answer session . And that concludes today's teleconference .