Q2 2026 Slide Insurance Holdings Inc Earnings Call

July 29, 2026

Operator 3: Greetings. Welcome to the Slide Insurance Q2 2026 earnings call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. Should anyone require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I will now turn the call over to investor relations. Thank you. You may begin.

Operator: Greetings. Welcome to the Slide Insurance Q2 2026 Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. Should anyone require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I will now turn the call over to investor relations. Thank you. You may begin.

Speaker #1: telephone keypad. As a reminder, Investor Relations. Thank you. You may begin.

[Company Representative] (Slide Insurance): Thank you. Good morning. With us today are your hosts, Bruce Lucas, Chairman and Chief Executive Officer of Slide, and Andy Omoritis, Chief Financial Officer. By now, everyone should have access to our earnings release, which was published yesterday after the market closed and can be found on our website at ir.slideinsurance.com. 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, anticipated events or trends, and other matters that are not historical facts. 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.

[Company Representative] (Slide Insurance): Thank you. Good morning. With us today are your hosts, Bruce Lucas, Chairman and Chief Executive Officer of Slide, and Andy Omoridis, Chief Financial Officer. By now, everyone should have access to our earnings release, which was published yesterday after the market closed and can be found on our website at ir.slideinsurance.com. 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, anticipated events or trends, and other matters that are not historical facts. 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 #2: Officer. By now, everyone should have access to our earnings release, which was published yesterday after the market closed and can be found on our website at ir.slideinsurance.com. 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, anticipated events, or trends, and other matters that are not historical facts. are subject to various assumptions, risks, uncertainties, and other factors that are difficult to predict, and which could cause actual results to defer materially from those expressed or implied in the forward-looking statements.

Speaker #2: ir.slideinsurance.com. Before we upon them. facts. Forward-looking statements in our discussion earnings release and recent filings with the SEC for a more detailed discussion of the risks and uncertainties that could impact the future operating results and financial condition of Slide.

[Company Representative] (Slide Insurance): These statements are not guarantees of future performance. Therefore, undue reliance should not be placed upon them. We refer all of you to our earnings release and recent filings with the SEC for a more detailed discussion of the risks and uncertainties that could impact the future operating results and financial condition of Slide. Our statements are as of today, 29 July 2026. We undertake no obligation to update any forward-looking statements we may make except as required by law. In addition, this call is being webcast. An archived version will be available shortly after the call ends on the investor relations portion of the company's website at www.slideinsurance.com. With that, I'd now like to turn the call over to our Founder, Chairman, and CEO, Bruce Lucas. Please go ahead.

Speaker #2: Our statements are as of today, July 29, 2026, and we undertake no obligation to update any forward-looking statements we may make except as required by law.

Speaker #2: In addition, this call is being webcast, and an archive version will be available shortly after the call ends on the Investor Relations portion of the company's website at www.slideinsurance.com.

Speaker #2: With that, I'd now like to turn the call over to our founder, Chairman and CEO, Bruce Lucas. Please go ahead.

Speaker #3: Thank you, and welcome to our Q2 2026 earnings call. We once again executed at a high level this quarter, reinforcing the strength of our tech-enabled coastal specialty model and its ability to produce industry-leading top and bottom-line results.

Bruce Lucas: Thank you. Welcome to our Q2 2026 Earnings Call. We once again executed at a high level this quarter, reinforcing the strength of our tech-enabled coastal specialty model and its ability to produce industry-leading top and bottom-line results. For the quarter, we grew gross written premiums by 16.7% year-over-year to $508 million, driven by continued growth in voluntary sales and renewals of previously acquired Citizens' policies. In Q2, our pace of Citizens' assumptions slowed in order to allow the company to bind its 2026 reinsurance treaty. We continued to grow gross written premiums driven by policy retention and continued growth in voluntary sales and the launch of our California E&S products.

Speaker #3: For the quarter, we grew gross written premiums by 16.7% year-over-year to $508 million. Driven by continued growth in voluntary sales and renewals of previously acquired Citizens policies.

Speaker #3: In the Q2, our pace of Citizens assumptions slowed in order to allow the company to bind its 2026 reinsurance treaty. We continued to grow gross written premiums driven by policy retention and continued growth in voluntary sales and the launch of our California E&S products.

Speaker #3: In addition to our top-line growth, Slide grew net income by $92.4% year-over-year to $134.9 million with diluted earnings per share of $1.06. Q2 return on equity was 11.7%, and our combined ratio improved to 57.5%, reflecting continued underwriting discipline and a lower level of catastrophe losses.

Bruce Lucas: In addition to our top-line growth, Slide grew net income by 92.4% year-over-year to $134.9 million with diluted earnings per share of $1.06. Q2 return on equity was 11.7%, and our combined ratio improved to 57.5%, reflecting continued underwriting discipline and a lower level of catastrophe losses. For H1 2026, our combined ratio is 56.5% and our return on equity is 23.8%, which equates to an annualized ROE of 45%. Our Q2 results provide further testament to our ability to deliver meaningful value creation for our shareholders. We continued to make meaningful progress in expanding our footprint.

Speaker #3: For the first 6 months of 2026, our combined ratio is 56.5%, and our return on equity is 23.8%, which equates to an annualized ROE of 45%.

Speaker #3: Our Q2 results provide further testament to our ability to deliver meaningful value creation for our shareholders. We continued to make meaningful progress in expanding our footprint.

Speaker #3: In May, we launched our residential property excess and surplus lines program in California, bringing much-needed capacity to an underserved homeowner's market. As we have been in the state for a couple of months, we are taking a thoughtful approach to underwriting new policies and we expect to accelerate our growth within California towards the end of the year.

Bruce Lucas: In May, we launched our residential property excess and surplus lines program in California, bringing much needed capacity to an underserved homeowners market. As we have been in the state for a couple of months, we are taking a thoughtful approach to underwriting new policies, and we expect to accelerate our growth within California towards the end of the year. In addition, we recently received regulatory approval to enter both Rhode Island and New Jersey, our 4th and 5th states of operation, respectively. Our expansion to the Northeast US further reflects the scalability of our platform and our ability to identify and act on attractive opportunities outside of Florida, where we believe we have an expertise to produce significant growth coupled with attractive returns. We remain confident in our ability to execute on our diversified growth strategy, creating long-term value for our shareholders.

Speaker #3: In addition, we recently received regulatory approval to enter both Rhode Island and New Jersey our fourth and fifth states of operation, respectively. Our expansion to the Northeast U.S.

Speaker #3: This further reflects the scalability of our platform and our ability to identify and act on attractive opportunities outside of Florida, where we believe we have the expertise to produce significant growth coupled with attractive returns.

Speaker #3: We remain confident in our ability to execute on our diversified growth strategy creating long-term value for our shareholders. We have purposely built our coastal specialty platform around one of the strongest balance sheets in the sector, giving us the financial flexibility to pursue this kind of expansion.

Bruce Lucas: We have purposely built our coastal specialty platform around one of the strongest balance sheets in the sector, giving us the financial flexibility to pursue this kind of expansion. As we move through the back half of the year, we expect to continue investing in the systems and underwriting talent to maintain our industry-leading top and bottom-line results. During the quarter, we completed our 2026 CAT reinsurance program. All in, we recorded a double-digit year-over-year risk-adjusted rate decrease while maintaining one of the strongest reinsurance towers in Slide's history. We increased our first event reinsurance tower by $1.4 billion versus 2025 while significantly expanding our total capacity by over $2 billion. As we move further into the Atlantic hurricane season, our substantially expanded reinsurance program provides robust protection designed to safeguard our balance sheet and limit the impact of any catastrophe events.

Speaker #3: As we move through the back half of the year, we expect to continue investing in the systems and underwriting talent to maintain our industry-leading top- and bottom-line results.

Speaker #3: During the quarter, we completed our 2026 cap reinsurance program. All in, we recorded a double-digit year-over-year risk-adjusted rate decrease while maintaining one of the strongest reinsurance towers in Slide's history.

Speaker #3: We increased our first event reinsurance tower by $1.4 billion versus 2025, while significantly expanding our total capacity by over $2 billion. As we move further into the Atlanta Hurricane season, our substantially expanded reinsurance program provides robust protection designed to safeguard our balance sheet and limit the impact of any catastrophe events.

Speaker #3: We will continue to manage our exposure with the same disciplined approach that has defined our results to date. I'd once again like to thank our reinsurance partners for their unwavering commitment to Slide through hard and soft market conditions, your partnership is greatly appreciated.

Bruce Lucas: We will continue to manage our exposure with the same disciplined approach that has defined our results to date. I'd once again like to thank our reinsurance partners for their unwavering commitment to Slide through hard and soft market conditions. Your partnership is greatly appreciated. Turning to capital management, we repurchased approximately 3 million shares of common stock during Q2 at a weighted average price of $17.95 per share under our share repurchase program. This continues to reflect our business model's ability to generate strong free cash flow and maintain a stalwart balance sheet, our commitment to returning capital to shareholders in a value-accretive way, alongside funding our growth initiatives. In addition, I am pleased to announce that our board of directors has approved the initiation of a quarterly cash dividend of $0.07 per share.

Speaker #3: Turning to capital management, we repurchased approximately 3 million shares of common stock during Q2 at a weighted average price of $17.95 per share under our share repurchase program.

Speaker #3: This continues to reflect our business model's ability to generate strong free cash flow and maintain a stalwart balance sheet; our commitment to returning capital to shareholders and a value accretive way alongside funding our growth initiatives.

Speaker #3: In addition, I am pleased to announce that our board of directors has approved the initiation of a quarterly cash dividend of $0.07 per share.

Speaker #3: This decision reflects the consistency and durability of our earnings power, the strength of our free cash flow generation, and the robust capital position at Slide.

Bruce Lucas: This decision reflects the consistency and durability of our earnings power, the strength of our free cash flow generation, and the robust capital position at Slide. Initiating a regular dividend marks an important milestone for Slide as a public company. It allows us to return capital to shareholders on an ongoing basis while continuing to invest in our growth initiatives and maintain the balance sheet strength that underpins our competitive advantage. The dividend complements our share repurchase program and underscores our confidence in the long-term trajectory of the business. We expect continued strength in Slide's earnings and balance sheet through the back half of 2026, and expect to continue investing in our growth initiatives and returning excess capital to shareholders to maximize shareholder value. Finally, our results this quarter reflect the dedicated work of our entire team.

Speaker #3: Initiating a regular dividend marks an important milestone for Slide as a public company. It allows us to return capital to shareholders on an ongoing basis while continuing to invest in our growth initiatives and maintain the balance sheet strength that underpins our competitive advantage.

Speaker #3: The dividend complements our share repurchase program and underscores our confidence in the long-term trajectory of the business. We expect continued strength in Slide's earnings and balance sheet through the back half of 2026 and expect to continue investing in our growth initiatives and returning excess capital to shareholders to maximize shareholder value.

Speaker #3: Finally, our results this quarter reflect the dedicated work of our entire team. I want to thank all of our employees for their relentless efforts and the important role they play in Slide's performance.

Bruce Lucas: I want to thank all our employees for their relentless efforts and the important role they play in Slide's performance. I'm proud of what we're accomplishing together, and I truly appreciate all of you. Thank you for your continued support of Slide. With that, I will now turn the call over to Andy Mouritsas to provide some color on our Q2 results.

Speaker #3: I'm proud of what we're accomplishing together and I truly appreciate all of you. Thank you for your continued support of Slide and with that, I'll now turn the call over to Andy Almerida to provide some color on our Q2 results.

Speaker #2: Thank you, Bruce, and good morning, everyone. In the Q2 net income rose 92.4% to $134.9 million from $70.1 million in the prior year period, resulting in diluted earnings per share of $1.06.

Andy Mouritsas: Thank you, Bruce, and good morning, everyone. In Q2, net income rose 92.4% to $134.9 million from $70.1 million in the prior year period, resulting in diluted earnings per share of $1.06. Our earnings profile continues to strengthen with growth in both the top and bottom lines. Gross written premiums reached $508 million, up 16.7% from $435.4 million in Q2 2025, driven by continued growth in voluntary new business and renewals of previously acquired Citizens policies. Total revenue increased 47.9% to $386.8 million from $261.6 million in the prior year period, with net premiums earned also growing 47.9% to $360.6 million from $243.9 million, reflecting continued top-line growth.

Andy Omiridis: Thank you, Bruce, and good morning, everyone. In Q2, net income rose 92.4% to $134.9 million from $70.1 million in the prior year period, resulting in diluted earnings per share of $1.06. Our earnings profile continues to strengthen with growth in both the top and bottom lines. Gross written premiums reached $508 million, up 16.7% from $435.4 million in Q2 2025, driven by continued growth in voluntary new business and renewals of previously acquired Citizens policies. Total revenue increased 47.9% to $386.8 million from $261.6 million in the prior year period, with net premiums earned also growing 47.9% to $360.6 million from $243.9 million, reflecting continued top-line growth.

Speaker #2: Our earnings profile continues to strengthen, with growth in both the top and bottom lines. Gross written premiums reached $508 million, up 16.7% from $435.4 million in Q2 of 2025, driven by continued growth in voluntary new business and renewals of previously acquired Citizens policies.

Speaker #2: Total revenue increased 47.9% to $386.8 million from $261.6 million in the prior year period, with net premiums earned also growing 47.9% to $360.6 million from $243.9 million, reflecting continued top-line growth.

Speaker #2: Net losses and loss adjustment expenses totaled $108.7 million in the quarter, as compared to $91.4 million in the prior year period. This quarter included $8.8 million of convective storm losses, compared with $5.5 million in the prior year period.

Andy Mouritsas: Net losses and loss adjustment expenses totaled $108.7 million in the quarter as compared to $91.4 million in the prior year period, which included $8.8 million of convective storm losses compared with $5.5 million in the prior year period. Our accident year loss ratio improved to 30.2% from 37.2%, primarily due to an improvement in overall loss experience. Policy acquisition and other underwriting expenses rose to $42.3 million from $32.1 million in the prior year period, driven by continued strong top-line growth resulting in increased policy acquisition costs. General and administrative expenses increased to $55 million from $37.9 million in the prior year period, primarily due to higher staffing levels supporting our growth. These trends produced an overall expense ratio of 27.4%, down from 30% in the prior year period, and a combined ratio of 57.5%, an improvement of 990 basis points year over year.

Andy Omiridis: Net losses and loss adjustment expenses totaled $108.7 million in the quarter as compared to $91.4 million in the prior year period, which included $8.8 million of convective storm losses compared with $5.5 million in the prior year period. Our accident year loss ratio improved to 30.2% from 37.2%, primarily due to an improvement in overall loss experience. Policy acquisition and other underwriting expenses rose to $42.3 million from $32.1 million in the prior year period, driven by continued strong top-line growth resulting in increased policy acquisition costs. General and administrative expenses increased to $55 million from $37.9 million in the prior year period, primarily due to higher staffing levels supporting our growth. These trends produced an overall expense ratio of 27.4%, down from 30% in the prior year period, and a combined ratio of 57.5%, an improvement of 990 basis points year over year.

Speaker #2: Our action year loss ratio improved to 30.2% from $37.2%, primarily due to an improvement in overall loss experience. Policy acquisition and other underwriting expenses rose to $42.3 million from $32.1 million in the prior year period, driven by continued strong top-line growth resulting in an increased policy acquisition cost.

Speaker #2: General and administrative expenses increased to $55 million from $37.9 million in the prior year period, primarily due to higher staffing levels supporting our growth.

Speaker #2: These trends produced an overall expense ratio of 27.4%, down from 30% in the prior year period, and a combined ratio of 57.5%, an improvement of 990 basis points year over year.

Speaker #2: The gains reflect the operating leverage we continue to build as we scale the business. As of June 30, 2026, we had cash and cash equivalents of $1.24 billion and total invested assets of $839.1 million, consisting primarily of fixed maturity securities available for sale.

Andy Mouritsas: The gains reflect the operating leverage we continue to build as we scale the business. As of 30 June 2026, we had cash and cash equivalents of $1.24 billion and total invested assets of $839.1 million, consisting primarily of fixed maturity securities available for sale. Turning to capital management. As Bruce mentioned, we repurchased approximately 3 million shares during the quarter at a weighted average price of $17.95 per share under our share repurchase program. There remains $114.1 million of availability under the program. In addition, our board approved Slide's first quarterly cash dividend of $0.07 per share. This furthers the company's balanced approach to capital returns while preserving the financial flexibility to fund diversified growth. We will continue to manage capital in a disciplined manner, prioritizing the actions that create the greatest long-term value for our shareholders. Once again, I am pleased to reaffirm our full year 2026 guidance.

Andy Omiridis: The gains reflect the operating leverage we continue to build as we scale the business. As of 30 June 2026, we had cash and cash equivalents of $1.24 billion and total invested assets of $839.1 million, consisting primarily of fixed maturity securities available for sale. Turning to capital management. As Bruce mentioned, we repurchased approximately 3 million shares during the quarter at a weighted average price of $17.95 per share under our share repurchase program. There remains $114.1 million of availability under the program. In addition, our board approved Slide's first quarterly cash dividend of $0.07 per share. This furthers the company's balanced approach to capital returns while preserving the financial flexibility to fund diversified growth. We will continue to manage capital in a disciplined manner, prioritizing the actions that create the greatest long-term value for our shareholders. Once again, I am pleased to reaffirm our full year 2026 guidance.

Speaker #2: Turning to capital management, as Bruce mentioned, we repurchased approximately 3 million shares during the quarter at a weighted average price of $17.95 per share under our share repurchase program.

Speaker #2: There remains $114.1 million of availability under the program. In addition, our board approved Slide's Q1 cash dividend of $0.07 per share. This furthers the company's balanced approach to capital returns, while preserving the financial flexibility to fund diversified growth.

Speaker #2: We will continue to manage capital in a disciplined manner, prioritizing the actions that create the greatest long-term value for our shareholders. Once again, I am pleased to reaffirm our full year 2026 guidance.

Speaker #2: We continue to expect gross written premiums between $1.85 billion and $1.95 billion, and net income between $455 million and $470 million. Top-line growth is expected to come primarily from sustained organic expansion from premiums outside of Florida, supplemented by selective opportunities in Florida that meet our targeted returns.

Andy Mouritsas: We continue to expect gross written premiums between $1.85 and 1.95 billion and net income between $455 and 470 million. Top-line growth is expected to come primarily from sustained organic expansion from premiums outside of Florida, supplemented by selective opportunities in Florida that meet our targeted returns. Thank you for your time. Operator, we are now ready to open the line for questions.

Andy Omiridis: We continue to expect gross written premiums between $1.85 and 1.95 billion and net income between $455 and 470 million. Top-line growth is expected to come primarily from sustained organic expansion from premiums outside of Florida, supplemented by selective opportunities in Florida that meet our targeted returns. Thank you for your time. Operator, we are now ready to open the line for questions.

Speaker #2: Thank you for your time, Operator. We are now ready to open the line for questions.

Speaker #1: 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.

Operator 3: 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. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue.

Operator: 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. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue.

Speaker #1: A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue.

Speaker #1: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions.

Operator 3: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we pull for questions. The first question is from Tommy McJoynt from KBW. Please go ahead.

Operator: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we pull for questions. The first question is from Tommy McJoynt from KBW. Please go ahead.

Speaker #1: The first question is from Tommy McJoint from KBW. Please go ahead.

Speaker #4: Hey, good morning, guys. Thanks for taking our questions. The first one here is around the reinsurance program. I appreciate some of those details that you gave in early June, with the New Year program.

Tommy McJoynt: Hey, good morning, guys. Thanks for taking our questions. The first one here is around the reinsurance program. Appreciate some of those details that you gave in early June with the new year program. My question though is, do you have a sense for what the cost of this year's program is relative to last year, where you cited, the expectation for the cost of that XOL reinsurance program for the 2025, 2026 year to be $431 million? Do you have an updated metric for the cost of this year's program relative to that figure? Thanks.

Speaker #4: My question, though, is: Do you have a sense for what the cost of this year's program is relative to last year, where you cited the expectation for the cost of that XOL reinsurance program for the '25-'26 year to be $431 million?

Speaker #4: Do you have an updated metric for the cost of this year's program relative to that figure? Thanks.

Speaker #3: Well, it's hard to do an apples-to-apples, Tommy, because we've had so much growth over the last year. What I can tell you is that, on a risk-adjusted basis, we saw reinsurance rate declines that were double-digit.

Bruce Lucas: Well, it's hard to do an apples to apples, Tommy, because we've had so much growth over the last year. What I can tell you is that on a risk-adjusted basis, we saw reinsurance rate declines that were double digit. To give you an exact number, we'd have to go in and pull it and then risk adjust it year over year.

Speaker #3: To give you an exact number, we’d have to go in and pull it, and then risk-adjust it year over year.

Speaker #4: Okay. Thank you. And with all that growth, if we were to fast forward to the end of the year to look at an enforced premium metric, do you have a sense for what the rough geographic mix would be between Florida, California, and the Northeast as you've opened some of those new markets?

Tommy McJoynt: Okay. Thank you. With all that growth, if we were to fast-forward to the end of the year to look at an in-force premium metric, do you have a sense for what the rough geographic mix would be between Florida, California, and the Northeast as you've opened some of those new markets?

Speaker #3: Yeah. I mean, the newer markets are still relatively nascent. I mean, we recently launched California. So there's probably a couple a million in premium there already.

Bruce Lucas: Yeah. The newer markets are still relatively nascent. We recently launched California, so there's probably a couple of million in premium there already. You start with beta tests with a handful of agents. You then scale it over the next couple of quarters as you add more producers to your network. New York is something that we hope to get launched here this quarter. The vast majority of premium through year-end is going to be Florida because of the size of the portfolio. We expect that geographic mix to really change in a material way as we head into 2027.

Speaker #3: But you start with beta tests with a handful of agents. You then scale it over the next couple of quarters as you add more producers to your network.

Speaker #3: New York is something that we hope to get launched here this quarter. So the vast majority of premium through year-end is going to be Florida.

Speaker #3: Because of the size of the portfolio, but we expect that geographic mix to really change in a material way as we head into 2027.

Speaker #4: Thanks. And I'll just sneak in one more modeling question. With the pace of Citizens takeout slowing significantly, where do you see the expense ratio trending from where it was in the first half of this year?

Tommy McJoynt: Thanks. I'll just sneak in one more modeling one. With the pace of Citizens' takeout slowing significantly, where do you see the expense ratio trending from where it was in H1 of this year? Thanks.

Speaker #4: Thanks.

Speaker #5: Hey, Tommy, how are you? I think we're going to be right around 28. We look at we will be low 30, but at the end of the day, we model ourselves between 28 and 30.

Andy Mouritsas: Hey, Tommy. How are you? I think we're going to be right around 28. We will be below 30, at the end of the day, we model ourselves between 28 and 30.

Andy Omiridis: Hey, Tommy. How are you? I think we're going to be right around 28. We will be below 30, at the end of the day, we model ourselves between 28 and 30.

Speaker #4: Easy enough. Thank you.

Tommy McJoynt: Easy enough. Thank you.

Speaker #3: Thank you.

Bruce Lucas: Thank you.

Speaker #1: The next question is from Paul Newsom from Piper Sandler. Please go ahead.

Operator 3: The next question is from Paul Newsome from Piper Sandler. Please go ahead.

Operator: The next question is from Paul Newsome from Piper Sandler. Please go ahead.

Speaker #6: Good morning. I was wondering if you could give us a few thoughts on the guidance that looks like the first half of the year was a happy experiment, a happy situation from a weather perspective.

Paul Newsome: Good morning. Was wondering if you could give us a few thoughts on the guidance. It looks like H1 of the year was a happy situation from weather perspective, which would imply maybe excess earnings relative to what you would expect at the beginning, but the guidance didn't change. Are you thinking, just trying to be more conservative? Is there anything under those base assumptions that we should think of that's changed in a significant way?

Speaker #6: Which would imply maybe excess earnings relative to what you would expect at the beginning of the guidance didn't change. Are you thinking just trying to be more conservative?

Speaker #6: Is there anything under those base assumptions that we should think of that's changed in a significant way?

Speaker #3: Yeah. Paul, that's a great question. And this is something that we've been going back and forth on internally for months now. We just want to maintain a very conservative forward guidance.

Bruce Lucas: Yeah, Paul, it's a great question. This is something that we've been going back and forth on internally for months now. We just want to maintain a very conservative forward guidance. I think that's important. If you look at our life cycle over the last several years, whenever we've gotten in front of investors and talked about where we project the future to be, we've always been very conservative. That goes back to even pre-IPO and post-IPO. At this point in time, if you think about top line, for example, we're pretty confident that we're going to be in that range, maybe even exceed it. We are managing our exposures during this quarter for our reinsurance treaty.

Speaker #3: I think that's important. If you look at our life cycle over the last several years, whenever we've gotten in front of investors and talked about where we project the future to be, we've always been very conservative.

Speaker #3: That goes back to even pre-IPO and post-IPO. So at this point in time, if you think about top line, for example, we're pretty confident that we're going to be in that range, maybe even exceed it.

Speaker #3: But we are managing our exposures during this quarter for our reinsurance treaty. And so we have to be cognizant of that because if we exceed the projections we gave to our reinsurers, there could be a very substantial true-up payment that would impact net income.

Bruce Lucas: We have to be cognizant of that, because if we exceed the projections we gave to our reinsurers, there could be a very substantial true-up payment that would impact net income. I think net income, we're probably trending in the right direction to exceed those estimates for sure. I think top line is most definitely going to be in that range, if not a little bit better. We're just trying to be conservative at this point in time.

Speaker #3: I think net income—we're probably trending in the right direction to exceed those estimates, for sure. And I think top line is most definitely going to be in that range.

Speaker #3: If not a little bit better, but we're just trying to be conservative at this point in time.

Speaker #6: And then a totally different topic. We hear a lot about Florida competition and pricing and the potential that on the margin, competition is pushing underlying profitability down.

Paul Newsome: A totally different topic. We hear a lot about Florida competition and pricing and the potential that on the margin competition is pushing underlying profitability down. What's your view currently? What are you seeing in the market, and how could it affect Slide?

Speaker #6: What's your view currently? What are you seeing in the market? And how could it affect Slide?

Speaker #3: Yeah. Another excellent question. And we get this question every quarter. I'm not seeing anything different from Q1, Q4, or Q3. There are a couple of new entrants that squeaked in with the very minimum of capital.

Bruce Lucas: Yeah. Another excellent question. We get this question every Q. I'm not seeing anything different from Q1, Q4, Q3. There are a couple of new entrants that squeaked in with the very minimum of capital. They can't really write any business until after hurricane season because they don't have reinsurance. They just don't have a lot of underwriting capacity. Not really seeing any type of impact to top line from increased competition. If you look in the Florida market, the main drivers of competition aren't these little companies that have very small balance sheets. It's the bigger carriers, the publicly traded. Florida Penn is a private, but they're a very big player here in Florida. We're not seeing any kind of change taking place within that core competitive group that we really compete with for top-line growth.

Speaker #3: They can't really write any business until after Hurricane season, because they don't have reinsurance. And they just don't have a lot of underwriting capacity.

Speaker #3: So I'm not really seeing any type of impact to top line from increased competition. If you look in the Florida market, the main drivers of competition aren't these little companies that have very small balance sheets.

Speaker #3: It's the bigger carriers, the publicly traded, Florida Pen is a private, but they're a very big player here in Florida. And we're not seeing any kind of change taking place within that core competitive group that we really compete with for top line growth.

Speaker #3: And in terms of margin, contraction, definitely not seeing margin contraction. If rates do ultimately trend lower in Florida because of reinsurance pricing and loss ratios, your profit margins are going to be lockstep with whatever that decrease is.

Bruce Lucas: In terms of margin contraction, definitely not seeing margin contraction. If rates do ultimately trend lower in Florida because of reinsurance pricing and loss ratios, your profit margins are going to be lockstep with whatever that decrease is. While the premium might go higher, your combined ratio is probably going to remain relatively static. Just not seeing any kind of warning sign right now that there's an issue in the near or medium term.

Speaker #3: So while the premium might go higher, your combined ratios probably going to remain relatively static just not seeing any kind of warning sign right now that there's an issue on the in the near or medium term.

Speaker #6: Great. Appreciate the help, guys. Thank you very much.

Paul Newsome: Great. Appreciate the help, guys. Thank you very much.

Speaker #3: Thank you, Paul.

Bruce Lucas: Thank you, Paul.

Speaker #1: As a reminder to ask a question, please press star one. The next question is from Randy Binner from Texas Capital. Please go ahead.

Operator 3: As a reminder, to ask a question, please press star one. The next question is from Randy Binner from Texas Capital. Please go ahead.

Operator: As a reminder, to ask a question, please press star one. The next question is from Randy Binner from Texas Capital. Please go ahead.

Speaker #2: Hey, thanks. Yeah, I have a few. I guess a follow-up to the question on reinsurance, just sizing it from last year. I think you covered this in the last call, but the even though your first loss coverage is 1.4 billion higher this year, that's really matching exposure.

Randy Binner: Hey, thanks. Yeah, I have a few. Just, I guess a follow-up to the question on reinsurance, just sizing it from last year. I think you covered this in the last call, but even though your first loss coverage is $1.4 billion higher this year, that's really matching exposure. It's not more cover per se, right?

Speaker #2: It's not more cover per se, right?

Bruce Lucas: We bought to relatively the same return period as we did the prior year. Yes, the reinsurance tower will increase with increased exposure because we need to protect our balance sheet and our policyholders. We are buying to a return period well in excess of the 130-year return period for first event. That is the mainstay in the Florida market. I think our return period was around 180. We are buying a substantially larger reinsurance tower than our market competitors. With our profitability and our ability to, in our opinion, underwrite at better margins, we would rather reinvest some of those reinsurance savings and increase the vertical stretch and horizontal stretch of our reinsurance program to better insulate the company from shock losses.

Speaker #3: We bought to relatively the same return period as we did the prior year. So yes, the reinsurance tower will increase with increased exposure because we need to protect our balance sheet and our policyholders.

Speaker #3: But we are buying to a return period well in excess of the 130-year return period for first event that is the mainstay in the Florida market.

Speaker #3: I think our return period was around the 180. So we are buying a substantially larger reinsurance tower than our market competitors. But with our profitability and our ability to, in our opinion, underwrite at better margins, we would rather reinvest some of those reinsurance savings and increase the vertical stretch and horizontal stretch of our reinsurance program to better insulate the company from shock losses.

Speaker #2: Okay. Understood. And then following up on your comment, Bruce, the potential for a true-up to reinsurers, is that just I heard that to be if you wrote too much business or not too much, but if you wrote more business than your plan, would that be the nature of the true-up you discussed, or is it something else?

Randy Binner: Okay, understood. Following up on your comment, Bruce, the potential for a true-up to reinsurers. I heard that to be if you wrote too much business or over, not too much, but if you wrote more business than your plan, would that be the nature of the true-up you discussed, or is it something else?

Speaker #3: Yes. That is correct, Randy. So we give our projections to the reinsurers I believe this year we gave to them February. And we are projecting out to September 30th with our in-force exposures, where we think the PIF is going to be located.

Bruce Lucas: Yes. That is correct, Randy. We give our projections to the reinsurers. I believe this year we gave it to them February. We are projecting out to 30 September with our in-force exposures, where we think the PIF is going to be located, and then running the reinsurance models against that projection. That projection is used by the reinsurers to underwrite our treaty and come up with pricing. There's non-congruent terms between different reinsurers. However, the one thing that is pretty consistent is that if you are over and above those expectations, there will be a true-up payment due to the reinsurers because your exposures were higher than they were anticipating. It's something that we manage to, because it's more expensive to do the true-up than it is to buy it on the front end.

Speaker #3: And then running the reinsurance models against that projection. So that projection is used by the reinsurers to underwrite our treaty and come up with pricing.

Speaker #3: And there's non-congruent terms between different reinsurers. However, the one thing that is pretty consistent is that if you are over and above those expectations, there will be a true-up payment due to the reinsurers because your exposures were higher than they were anticipating.

Speaker #3: So it's something that we manage to because it's more expensive to do the true-up than it is to buy it on the front end.

Speaker #2: Okay, great. And then just a couple of quick ones on the model. Was there a cap and PYD identified in the quarter, so we can kind of get to an underlying loss ratio?

Randy Binner: Okay, great. Just a couple quick ones on the model. Was there a CAT and PYD identified in the quarter so we can kind of get to a underlying loss ratio?

Speaker #3: Finally, Andy's looking at his numbers now. But I can tell you we did—we had $0 of PYD through the first half of this year.

Bruce Lucas: I know Andy's looking at his numbers now, but I can tell you we had $0 of PYD through H1 of this year.

Speaker #3: That's correct. And cap losses—you have that number?

Andy Mouritsas: That's correct.

Andy Omiridis: That's correct.

Bruce Lucas: CAT losses, do you have that number?

Speaker #6: 2.4 points.

Andy Mouritsas: 2.4 points. It was $8.8 million, and it was convective storms. Ultimately, I guess the base was 27.8 plus another 2.4 for the convective storms. It gets you to the 30.2.

Andy Omiridis: 2.4 points. It was $8.8 million, and it was convective storms. Ultimately, I guess the base was 27.8 plus another 2.4 for the convective storms. It gets you to the 30.2.

Speaker #5: It was 8.8 million, and it was convective storms. So ultimately, I guess the base was 27.8 plus another 2.4 for the convective storms, I guess, to the 30.2.

Speaker #2: All right. Great. Thanks a lot.

Randy Binner: All right, great. Thanks a lot.

Speaker #3: Thank you, Randy.

Bruce Lucas: Thank you, Randy.

Speaker #1: The next question is from Alex Scott from Barclays. Please go ahead.

Operator 3: The next question is from Alex Scott from Barclays. Please go ahead.

Operator: The next question is from Alex Scott from Barclays. Please go ahead.

Speaker #4: Hi. I had one on just the reforms in Florida that have occurred on the legal side of things, and just the impact you're seeing in your business.

Alex Scott: Hi. I had one on just the reforms in Florida that have occurred on the legal side of things and just the impact you're seeing in your business. We've heard, I guess, from some industry peers that have talked about maybe loss cost trends easing a bit, and I think some of that may be Florida is where you're concentrated. I just wanted to understand, how are you viewing loss trends in Florida, and how is that shifting related to those reforms and what you're learning about it?

Speaker #4: We've heard, I guess, from some industry peers that have talked about maybe lost cost trends, easing a bit. And I think some of that maybe Florida is where you're concentrated.

Speaker #4: And so I just wanted to understand, how are you viewing loss trends in Florida and how has that shifting related to those reforms and what you're learning about it?

Speaker #3: I mean, we've seen reduced loss costs really going back to early 2023 post-reform. So at that point in time, we did a deal with UPC Insurance who went insolvent.

Bruce Lucas: We've seen reduced loss costs really going back to early 2023 post-reform. At that point in time, we did a deal with UPC Insurance who went insolvent. We took the majority of their policies, and we were able to get those policies issued as brand-new policies with the new special provision language that encapsulated tort reform. We were the first company in Florida to really see the power of the reforms in real time because it was half of our portfolio when we signed that deal. Now, since then, we have seen loss cost trends go down. There's no question about that. I think if you look at frequency and severity numbers, they've been pretty consistent over the last couple of years. I haven't seen too much movement there. I will say that plaintiff attorneys are still filing their lawsuits.

Speaker #3: We took the majority of their policies, and we were able to get those policies issued as brand new policies with the new special provision language that encapsulated tort reform.

Speaker #3: So, we were the first company in Florida to really see the power of the reforms in real time, because it was half of our portfolio when we signed that deal.

Speaker #3: Now, since then, we have seen lost cost trends go down. There's no question about that. But I think if you look at frequency and severity numbers, they've been pretty consistent over the last couple of years.

Speaker #3: I haven't seen too much movement there. I will say that plaintiff attorneys are still filing their lawsuits. There was a report that came out last week that talked about the Florida litigation environment.

Bruce Lucas: There was a report that came out last week that talked about the Florida litigation environment. In 2020, 79% of all homeowner litigation stemmed from Florida, while only 8% of the claims came from Florida. Well, updated to the newer numbers now, it's closer now to 39%, so it's almost been halved. We know that the tort reforms are working. They've cut down the number of lawsuits in Florida, but the plaintiff attorneys are still filing lawsuits every day. It's just they don't have the same legal mechanisms to extort an outsized benefit from our policyholders because they don't have the one-way attorney fee, and they no longer have assignment of benefits. I think the market's very stable right now is the conclusion that I'm reaching.

Speaker #3: In 2020, 79% of all homeowner litigation stemmed from Florida, while only 8% of the claims came from Florida. Well, updated to the newer numbers now, it's closer to 39%.

Speaker #3: So, it's almost been halved. So we know that the tort reforms are working—they've cut down the number of lawsuits in Florida. But the plaintiff attorneys are still filing lawsuits every day.

Speaker #3: It's just that they don't have the same legal mechanisms to extort and obtain outsized benefits from our policyholders, because they don't have the one-way attorney fee.

Speaker #3: And they no longer have assignment of benefits. So I think the market's very stable right now. The conclusion that I'm reaching.

Speaker #4: Got it. That's all very helpful. The second question I wanted to ask about is just capital deployment. Obviously, you're putting a fair amount into share repurchases, which makes sense given where your stock is.

Alex Scott: Got it. That's all very helpful. Second question I wanted to ask about is just capital deployment, and obviously you're putting a fair amount into share repurchases, which makes sense, just given where your stock is. How much interest is there in M&A, and to what degree are you looking to use that as a lever to enter new markets?

Speaker #4: How much interest is there in M&A and to what degree are you looking to use that as a lever to enter new markets?

Speaker #3: Yeah, that's a great question. We're always looking at M&A. We've been in talks with several different companies over the last six months. We have not pulled the trigger on a deal just yet because price expectations from the targets are simply too high.

Bruce Lucas: Yeah, that's a great question. We're always looking at M&A. We've been in talks with several different companies over the last six months. We have not pulled the trigger on a deal just yet because price expectation from the target is simply too high. Everybody thinks their business is the best business, us included. I understand, going through this process, that you're going to run into those types of roadblocks. I still believe there are a couple of meaningful acquisition targets that are out there in the market where if we merged and combined forces, it would be an incredibly powerful company for staying power, pricing, profitability, et cetera. If we can find the right target with the right deal metrics, we're in. We have an incredibly strong balance sheet here.

Speaker #3: Everybody thinks their business is the best business, us included. So I understand that, going through this process, you're going to run into those types of roadblocks.

Speaker #3: I still believe there are a couple of meaningful acquisition targets out there in the market where, if we merged and combined forces, it would be an incredibly powerful company for staying power, pricing, profitability, etc.

Speaker #3: But if we can find the right target with the right deal metrics, we're in. We have an incredibly strong balance sheet here. And to your point, we are sitting on excess capital.

Bruce Lucas: To your point, we are sitting on excess capital, but it's not necessarily a bad thing to have. In the interim, what we're trying to do, Alex, is just kind of continue with our buyback activity and now a quarterly dividend that's come in. It's the highest yield in the Florida market. We're trying to find ways in the interim to deploy capital for the benefit of shareholder returns.

Speaker #3: But it's not necessarily a bad thing to have. In the interim, what we're trying to do, Alex, is just continue with our buyback activity and now a quarterly dividend that's come in.

Speaker #3: It's the highest yield in the Florida market. So we're trying to find ways in the interim to deploy capital for the benefit of shareholder returns.

Speaker #4: Got it. Thank you.

Alex Scott: Got it. Thank you.

Speaker #3: Thank you.

Bruce Lucas: Thank you.

Speaker #1: There are no further questions at this time. I would like to turn the floor back over to Bruce Lucas for closing comments.

Operator 3: There are no further questions at this time. I would like to turn the floor back over to Bruce Lucas for closing comments.

Operator: There are no further questions at this time. I would like to turn the floor back over to Bruce Lucas for closing comments.

Speaker #3: I want to thank everyone for attending our second quarter earnings call.

Bruce Lucas: I want to thank everyone for attending our Q2 earnings call.

Operator 3: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

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