Q2 2019 Earnings Call
No not at this time I'd like to turn the conference over to Bernard So Kelly Investor Relations. Please go ahead Sir.
Good morning, and welcome again to the fed not second quarter 2019 financial results Conference call.
Our earnings release and prepared remarks include references to non-GAAP measures such as adjusted operating income.
We use these non-GAAP measures to provide greater transparency and a more meaningful efficient comparison to prior year's results.
Our non-GAAP definitions can be found on page three of our earnings release and reconciliations from the GAAP measures to the non-GAAP measures begin on page 12.
Statements in this conference call that are not historical facts are forward looking statements.
Words, such as anticipate believe budget contemplate continue could envision estimate expect guidance indicate intend may might plan, possibly potential predict probably pro forma project seek should target will and other similar words or phrases are intended to identify forward looking statements.
The matters discussed on this call that are forward looking statements are based on current management expectations involving risks and uncertainties that may result in these expectations not being realized.
Actual events outcomes and results may differ materially from what is expected what is expressed or forecasted in forward looking statements made on this call due to numerous risks and uncertainties, including but not limited to the risks and uncertainties described in this conference call. Our press release issued yesterday and other filings made by the company with the FCC from time to time.
Forward looking statements made during this conference call speak only as of todays date and fed not holding company, specifically disclaims any obligation to update or revise any forward looking statements to reflect new information future events or circumstances or otherwise.
Now I'll turn the call over to Mike wrong, but not to president CEO and director.
Thank you good morning, and welcome to our second quarter 2019 Conference call, Ron Jordan, Our Chief Financial Officer, and Air Fernandez, Our Chief Accounting Officer are here with me. This morning, along with Bernie call Kelly from our Investor Relations team.
I will provide an overview of the quarter's performance and then Ron will give additional financial details on the quarter's results before we discuss our second quarter operating results I want to acknowledge that as a recent public disclosures have indicated we are actively engaged in conversations with one of our longstanding shareholders, we value and appreciate that input and the insights of all of our shareholders, but will not be commenting on those conversations at this time.
We will focus todays prepared remarks, and Q and a portion of the call on our quarter's results as well as our operating and growth strategy.
Now turning to our second quarter performance.
Our core fundamentals are solid with the second quarter showing strong rebound in earnings sequentially, but we did feel the impact of another unusual that we continue to make substantial progress on our objectives, particularly with the acceleration of our diversification strategy and the results we're seeing from our non Florida homeowners book.
Also we completed our 2019 reinsurance program on favorable terms, given the tougher pricing market and we're also working toward the completion of the mace on acquisition.
During the second quarter strong hail and wind related storms produced catastrophic events across Texas, Louisiana and other states. These events reduced our pre tax income by 9.3 million.
Gross cat losses in the quarter were 17 million, what the great majority or 15.5 million coming from our non Florida property business.
The severe weather events during the first half of the year or unusually intense and have resulted in significant claims activity.
I'm proud to say that the dedicated fed that's staff again rose to the occasion and providing quality service to our policyholders and the trusted agents in their time of need which is always fed that's number one priority.
This level of best in class service has afforded us the sterling reputation in our market.
Our reputation makes fed Nat a highly sought destination for our partner agents in the broader insurance not work, we believe that our strong internal team paired with our long term initiatives provide policyholders the best possible experience and position us to create value for our shareholders.
In the quarter, we made strong progress in winding down our non core auto and C.G. all business lines.
Including a significant reduction in open auto claims.
The eventual elimination of these businesses position us to improve the profitability on our core homeowners insurance business.
Overall, our improving operating efficiency is contributing to better financial results absent the weather events.
Not in the <unk> income in the quarter was 7.1 million or 55 cents per share.
A big improvement over the first quarter loss of $3.9 million and below the 8.8 million reported in last years second quarter. The progress we've made on our initiatives combined with the earned rate increases in Florida and the recent legislation that effectively puts an end to the assignment of benefits it'll be headwind.
It has impacted our industry over the last several years.
It represents catalyst for further improvement in our results as we move into the second half of the year.
Hey, Ob reform, which went into effect on July 1st marks a transformative time in our industry and it'll be has been a disruptive force in the Florida homeowners market and one of the main reasons for the increase in our Attritional loss ratio over the past four years. However, we've been able to mitigate its impact through our proactive exposure management strong underwriting claims management as well as the rate increases approved by the state to help insurers like fed Fednat compensate for radio Billy.
We believe the new legislation as a win not only for the insurance ecosystem, but most importantly for all Florida homeowners.
To that end, it's notable that citizens recently lowered their homeowners multi peril rate increase by nearly six percentage points on the heels of the implementation of the legislation.
Overtime, it will lead to lower premiums for policy holders and lower cost to insurers and our reinsurance partners.
It'll be relief also puts us in a much better position to write more new policies and renew existing policies that meet our strict underwriting standards.
So in a more rational.
Pricing market place I see our Florida book growing not shrinking.
Our latest rate increase of 4.6% for new and renewal policies went into effect early in the second quarter.
Rates have now increased a total compounded rate of 21% in the last three years in response to higher claim costs in the Florida market.
Primarily to offset the challenges are they will be.
And looking outside of Florida, our diversification strategy is working well and pay off we continue to grow market share in Texas, Louisiana, South Carolina, and Alabama and believe we have a long runway for continued growth in these states.
In the second quarter gross premiums earned grew to over 24 million a 57, 57% year over year increase led by the exceptionally strong growth in Texas, our biggest book of business outside of Florida, which more than doubled gross premiums earned and written.
We recently announced our new reinsurance program, which went into effect on July 1st.
In view of our pending acquisition of Mace on insurance company. The New program includes mace on their boat, thereby capitalizing on scale and spreader breast synergies within our reinsurance program. The strong program provides approximately $1.3 billion of single event coverage in excess of 27 million and aggregate coverage of $1.8 billion for a total cost of 205 million, including make Sun, which is scheduled to close in December .
Excluding may soften, but thats coverage has a total net retention of $22 million at a total cost of approximately $162 million.
The severe and unusual events, we faced over the past three year come home to roost.
In the form of former reinsurance pricing, while we absorb some of the brunt of the pricing pressure, our strong relationships with our robust panel of reinsurers enable us to land on competitive terms, giving their evolving view on risk in the region. We continue to appreciate those strong support we receive from our reinsurance partners.
Let me provide an update on our base on acquisition were now finalizing the approvals and the consent orders from the state regulators in both Florida and Louisiana.
In accordance with the equity purchase agreement. The closing date is anticipated to occur in December 2019.
To reduce our downside risk associated with potential cat losses to our second half 2019 financial results. We are bullish on the benefits of that Mason brings the fed Nat and our shareholders.
May sign accelerates, our diversification strategy and it's a great operating and financial fit it increases our market share in Louisiana, Texas markets, we know well and strengthens existing distribution channels in the local Florida market. We were encouraged by their significant rate increase in Texas, which will benefit our 2020 results. Following the expected close in December of this year.
May sound also provides important opportunities for us to provide our partner agents more product into excel rate execution on our middle market strategy within Florida.
The acquisition is expected to be accretive to earnings and will provide additional scale, which will contribute to strong financial performance in 2020 and beyond.
In summary, we are continuing to make meaningful progress on our growth strategies, which position us to improve earnings as we head into the second half of the year and longer term to significantly enhance the value creation opportunity to fed Nat shareholders. The new age will be legislation combined with the recent rate increases provides a much more favorable operating environment in the Florida market to grow book and improve profitability.
Our non Florida coastal business continues to capture profitable market share and contribute to overall profitability. We are experienced operators and these days and have developed strong relationships with agents and reinsurers over the years, which bodes well for future growth.
The mace on acquisition will be a great addition to fed net as we enter 2020, increasing our gross written premiums and delivering earnings accretion in the first year.
Further the December close time.
D. risk our second half 2019 results from incremental hurricane risk finally, the cost reduction measures. We have taken over the past year gives us a lean and efficient operating structure to grow profitably and scale. Our business. We believe we are set for improved performance and sustained profitable growth throughout this year and excited about the future for fed Nat.
With that I will turn the call over to Ron.
Thanks, Mike and good morning, everyone.
Our second quarter financial results improved substantially over the first quarter with net income up almost 11 million and adjusted operating income up over $8 million, excluding cat losses from both periods. Adjusted operating income was up sequentially demonstrating the underlying strength of our core homeowners business.
Based on our improved performance and the benefits, we expect from the positive industry and company initiatives. Mike discussed. We believe we are well positioned to continue this strong momentum into the second half of 2019 and beyond.
Net income was 7.1 million or 55 cents per share in the quarter. Adjusted operating income was $5.7 million or 44 cents per share. The primary non-GAAP adjustment. This quarter was the exclusion of $2 million of pretax unrealized gains on the investment portfolio.
Similar to first quarter the headline for the second quarter was weather 12 different weather events were catalogs by Tcs during the quarter, resulting in $17 million of estimated gross losses for fed Nat all but 1.5 million of which pertain to our non Florida business predominantly Texas and Louisiana.
Net of the 50% profit sharing agreement agreement in place with the third party MG you that manages our non Florida business. These storms impacted our twoq pre tax income by $9.3 million or 6.9 million after tax.
Note that the profit sharing offset flows through other underwriting expenses in our income statement.
So while the impact on our combined ratio from these storms was 10 points corresponding to the 9.3 million pre tax impact the loss ratio was impacted by 18 points corresponding to the 17 million of gross losses and the expense ratio benefited by eight points due to the profit sharing offset.
Most of these storms were fairly small a typical this time of year in the Gulf Coast. One storm. However, it was a little more unusual Tcs event number 927 gave rise to inch in three inch hail and the Houston, Texas, and Louisiana Lake Charles Louisiana area, There's further south than historical similar events.
This single event resulted in almost $11 million of losses in the quarter with an estimated bottom line impact of $4.1 million, representing almost 60% of the earnings hit from cat events in the quarter.
Absent this anomalous Houston Lake Charles Storm, our adjusted operating income would have been approximately $9.8 million or 76 cents per share representing an annualized Roe of just under 17%.
Adjusted operating revenue, which excludes gains and losses on the investment portfolio was $103.3 million in the quarter up 8.2% versus Two Q1 8 with growth of almost 14% and our homeowners line of business driven by strong growth in net earned premiums.
Our net loss ratio was 71% in the quarter, a 450 basis point sequential improvement from 75%.
But up year over year from 57% in last years second quarter. The higher loss ratio was the result of the 17 million of gross catastrophe losses that I just updated you on.
The Houston Lake Charles Storm added 11, and half points all by itself otherwise the loss ratio would have come in at 59% just two points above Twoq, 18, which was a pretty clean quarter with less than $2 million in severe weather.
Second quarter's net expense ratio was 30.7% and 11.4 percentage point improvement compared to the 2018 second quarter expense ratio benefited from our expense save initiatives along with the profit sharing impact of the non Florida weather losses as already described.
Along with the benefit of lower cat reinsurance spend into Q1 9 versus Twoq you 18.
Let's take a look at our lines of business, starting with our core business homeowners adjusted operating income swung to a resilient 6 million in the quarter.
Up from the 1.4 million loss, we reported in Q1, driven by the reduced impact of cat losses in the second quarter compared to the prior year quarter lower reinsurance spend into Q1 9 limited the decline in earnings to just 2.8 million. Despite the current quarter, including 8 million more in cat losses than Two Q1 8 did.
Total homeowners gross written premiums grew $8.6 million or 5.5% compared to the second quarter of 2018 gross written premiums in the state of Florida were down $5 million or just under 4% and up a strong $13.6 million or 60% and our non Florida business offering a strong proof point for our continued portfolio geographic diversification efforts.
Our homeowners combined ratio was 97% in the quarter compared to 93% in the comparable quarter last year. The combined ratio improved from 108.8% in this year's first quarter as a result of the weather impacts already discussed.
Turning briefly to our noncore operations auto is purely in Crane claims runoff mode. Heavy claims settlement activity in the quarter resulted in $1 million of adverse reserve development with open claim count down over 30% as compared to March 31.
Commercial general liability, which is included in our other line of business.
Had earned earned premiums decrease of 55% into Q versus one Q2 less than half a million dollars.
Our CGM all unearned premium reserve will be fully earned out by September 30, and we recorded $1 million of reserve development and CGS in the quarter.
Overall, our other line of business generated adjusted operating income of 600000 in the quarter up almost $1 million sequentially from first quarter's adjusted operating loss of 300000.
The results of our investment portfolio are also included in other net investment income of $4.3 million was an increase of 550000 over Q1 and represents a $16 million plus dollar contribution to pre tax earnings on an annualized basis.
Investment gains, which we exclude from our non-GAAP measures, but which represent very real economics were $2 million in the quarter, primarily due to strong equity market performance.
Turning to our capital structure earlier this year, we strengthened the balance sheet and secured our long term capital position in conjunction with the mace on transaction.
Book value per share rose approximately 6% during the quarter to $17.96 per share.
We currently have $110 million plus of liquidity.
At our Holdco and non regulated subs, which of course includes $41 million of funds earmarked for closing of the main Nissan transaction later this year.
The roughly $70 million of liquidity that will remain after closing on may soften puts us in a comfortable position for hurricane season, and has us poised to execute on share buybacks when appropriate.
We're looking forward to having the opportunity to re enter the repurchases marketplace. As we believe that at its recent trading range using some of our excess liquidity or repurchase our own shares is the best investment we can make for our shareholders.
Our fixed income portfolio remains short term with an average duration of 3.8 and a high quality composite S&P rating of a minus with a total carrying value of $456 million.
We ended the first half of the year with $134 million in cash and cash equivalents, which of course includes the undeployed mace on funding.
To wrap up we are confident that our core underlying business remains strong and showed steady sequential improvement amid turbulent weather related headwinds.
We're in a great position to deliver improved fundamentals in the second half of the year from earned premium rate increases, which will add 4 million of second half incremental gross earned premium and the benefits of eight will be reform and our local Florida market combating a severe legacy headwind to profitability.
Our diversification strategy is working and we are building momentum from the strong first half of the year in Texas, and Louisiana, two states that we know well.
The earnings drag from our noncore business will also continue to wind down in the third and fourth quarters of this year.
Our past initiatives to reduce staff and increase our use of technology have provided greater efficiencies and position us to leverage operations and scale our business as we grow and with that I'll turn the call back over to Mike.
Thank you Ron operator with that we're ready for questions. If you can open up the line.
Thank you ladies and gentlemen at this time if you have a question. Please press Star then one on your Touchtone phone.
My question has been answered or you would like to remove yourself from the queue you may press the pound.
To prevent any background noise, we ask that you. Please place your line on mute. Once your question has been stated.
Our first question comes from Greg Peters with Raymond James Your line is open.
Good morning.
I have.
Well I'm going to focus just on three questions for you guys first of all.
I was looking at your policy count numbers, particularly in Florida.
It's down.
6% to over 6% on a year over year basis I was wondering if you could.
Give us a sense of what you're doing line or re underwriting basis and tie that into a discussion on how your distribution partners in the relationships are proceeding with.
Yes, good morning, Gregg in terms.
Yes in terms of the Florida policy count.
We're down meaningful amounts from the prior year and actually back three four years.
I believe we peaked at about 285000, and we're down to about 240000 and Thats a direct result of underwriting new business as it comes in re underwriting existing business as it renews and ensuring that we have rate adequate premium on those policies in a typical month, we in India.
Rate or is that the industry users will do about a 100000 quotes.
And we're only binding about 5000 policies about about 5% back about five years ago. We are in the high single digits about eight 910% we're at 5%.
I do believe the market is competitive.
Periodically we see.
Certain competitors make certain moves.
But but really nothing too disruptive.
And now obviously with that we do have additional write that went into effect in April that has helped us open up more business and now with eight will be reformed taking effect July one we believe that.
There is some there is some more room for us to grow the book. The book, However, we're remaining cautious and and I don't really see that happening in the third quarter. So much.
But if we see what we think we're going to see which is positive trends I think that you can see our book.
Growing in the fourth quarter within Florida.
But but I would say in terms of our Pip count I think the 240000 is probably our low point.
And I don't see it shrinking any further.
Okay.
Thank you.
So.
A couple of your.
Dave you know as it relates to.
Your prior year development and I'd like you to extend it just beyond the homeowners any ob issue, but also talk about it in the auto segment because your auto segment was.
It was a little worse than expected.
In terms of.
The second quarter there it was clearly.
A rush to get claims and with AOL be associated with it but I will tell you where I think we saw the majority of it.
Was it was definitely on aroma definitely on Michael and barred the hailstorm that went through there were one of the largest writers up in that market.
It really happened at a very opportune time, where these vendors I would say storm those areas and once again I think that will definitely impact us.
And that's those are items that are in the rear view in terms of hitting us on a net basis. The attritional loss I absolutely believe there is there is a headwind that's behind us and and now we have some benefit on a go forward basis in terms of auto Im switching gears. The challenge with auto was you go back two three years ago.
We were.
We had about 50 to 60 people on the auto team, we're down under a ballpark a half a dozen that are working on these claims and there are most talented adjusters and the best folks that we've got.
That are working on him. So we're seeing really a significant reduction.
Of policies that had claims associated with them, though unfortunately, we do so you see some reopens.
From prior years on that auto program.
Claims that we thought we had closed down that since reopened.
So once again, it's it's the auto program.
As you May recall, our last policy that we had in force was last July as in 12 months ago.
And the most challenging program that we had has ended 24 months ago. So so I think thats going farther and farther behind us.
And so just to follow on your comments there Mike.
This reopened process I mean, when when does that window closed completely or I mean is this something that is going to be a drain.
Or a headwind for you guys for the next couple of years.
No I don't think its going to be a headwind as it relates to auto for the next couple of years.
I, absolutely believe it's mostly behind us.
It's frustrating to see the number for you just like it is for us for all of our shareholders.
But in terms of once again.
You know just the sheer number of open claims that we have today versus what we had at the end of Q1 and the end of Q4 and even the reopens that we see everything is dwindling pretty quick on those programs and really what you are seeing when we put the development out there is really us re.
You know putting numbers up there for bulk because we want to make sure we've got bulk reserves.
Beyond what we're seeing and in the case reserves on those individual files.
Okay.
The final question I'll ask is around reinsurance.
So I think you said in your prepared remarks, the reinsurance cost for including me sign was $205 million acts.
Mace on its 162 million.
So I'm I'm I'm trying to figure out what the ceded premium.
<unk> expense will be on a quarterly basis for the next four quarters.
And yeah.
If I eat in the homeowners line, if I use the 162, it's $41 million if I use the two all five at 51 million. So maybe you can connect the dots for me and sort of give me a sense of how that might look.
For the next call, Yes, you know what I would say it a slightly different is 162 divided by the 12 months. So if you take that.
For July August September October November and then in terms of Mace on was that included in be it would be the two all five divided by the by.
The 12 months that are remaining the other let's call it seven months and the contract period.
Yes so.
If you compare the new treaty year to the prior treaty year, and just look at the nominal dollars our annual cost is going up.
13 million or so so divided by four you are looking at.
3.3 million a quarter of higher seated at expense pretax.
Got it I think that it's going to work out to about a 36% seeded ratio on a on an earned premium basis thats in the homeowners line correct.
Over that's and I'm looking at overall with that.
Okay.
Thank you for the answers.
All right. Thanks.
And our next question comes from Doug Ruth of Lenox Financial services. Your line is open.
Hi, congratulations on the improved sequential results.
Good morning, Thank you.
You could you talk some about the steps that you talk to further wind down the non core auto and commercial lab.
Commercial liability.
Expenses.
Yes, basically you know the once again those are two lines that we've exited.
In terms of auto we have not had a policy in force were year since last July and once again, there is multiple programs that we've had.
The most challenging program that we had were two years out in terms of CG hour down to and enforce of less than $1 million.
And in terms of the overhead.
Once again there is.
We have significantly cut back on that staff as you may recall, Doug over in 2018.
We downsized about 100 people total we're at about 320 total today, we peaked at about 431 I believe.
So weve significantly shrunk the team in terms of the claims handling that's what remains open on auto and CGM.
And that's on the liability side and as you know we have liability within a homeowners program.
So really thats all been consolidated into one team and we're very happy with the team that we have over there and those individuals that that are with us.
So we think that we've got the strongest folks with us.
And I think they're doing a great job on it.
Okay.
As far as the.
Getting the approval from the department.
The Illinois, the Louisiana Department of insurance.
Is there anything you folks need to do to satisfy them can you.
Verify that's a little bit.
Yes.
We believe that we have satisfied everything with the Louisiana Department of insurance as well as the Florida office of insurance regulation, we have not yet received signed documentation back to us, but we believe for the most part or that the approvals have been.
Granted to us at least we believe so verbally we've signed off on the documentation and we're just waiting for that to be returned back to us.
Okay, you made the announcement about the hiring of the monarchs manager, who sounds like a terrific.
Ill person to bring on to the team is there any update since this person has started working for the company.
Yes, Matt. We're also is a great addition to the team he is well known in Florida. He attended our agents conference with US in June and was was well received by a lot of the agents who have known him for many years. So we're excited to have him on the team.
He is.
Only been with us for a little bit of time, a few months now so he's still digging into it but we have high expectations of Mel as well as our whole team. He is working well with the rest of our team.
Communicating with our agents and.
We've launched our revamped monarch program effective July one.
We're intentionally keeping it very small keeping it very slow to make sure that we're happy with what we see.
Before we ramp it up more so we're happy where we're at with the additions.
Of Mel and the relaunch of the program.
Okay.
With the within the sign acquisition one of the things that you told US was that there were some was putting through fairly large rate increases.
In the wheezy and in also in Texas.
From what you can see how do you think the rate increases have been working for the company.
I think.
I think Mason has done a great job of growing over the years. They were formed in 2012, they grew to $100 million I think Doug Grouchy.
And his team have done a good job, but I do think that they needed some rate on some of those lines of business in Louisiana. They took some rate in 2017 and in 2018. They took an additional 10 points I believe it was November .
They have a ballpark of a $50 million program.
And I think that that 10 points goes a long way in Louisiana, I think thats a quality book in terms of Texas. They did take a lot of rate and in that program.
So statewide average in January of 19, it was 10 points and then an additional 30 points effective August here.
So that will start to grow gradually rolling through.
That's a book that's in the Thirtys 30 million range.
And that rate will absolutely have a material impact on the underwriting profitability.
So that the total gross written on that program is about a $100 million.
Once you get our intention is to.
Let Doug and his team continue doing what they do which is I think theyve got good distribution good good underwriting.
And then just really incorporate our efficiencies in terms of our our our claims and our operations some of the functions that they contract out.
So we're real excited about the closing on that end and hope to be able to do that at the beginning of December .
Okay and my final question is now with the Ob reform in place.
As he has fed Nat started to offer.
Policy that offers lower rate people sign up.
It will be waiver you had talked about that possibility.
Sure.
That has not yet occurred.
Right now the department is working on.
The language that works for them and you're going to see that most carriers will have very similar language. So let me clarify there's two components to the A.O., Pete Hey, Ob reform and number one July one is a is a meaningful date and basically that change the rules of the game where.
Some of the abuses I think on the lion's share of the abuses are going to be eliminated the second function is allowing.
Companies to.
To exclude AOCI may not allow it and with that the.
Policyholder, we'll be getting a corresponding credit I anticipate that going in shortly and.
Let's just say you know, perhaps going live roughly January one.
But I think that would be neutral for the most part meaning.
The corresponding credit with removing that coverage will be neutral as it were.
Incorporates into an underwriting profit.
Citizens as just modify their rate increase I back in December they were looking for an 8.5% increase on their homeowners multi peril.
After eight will be reform they modified it to a 2.6% increase that's 5.9 points lower based on their previous presumed.
It will be benefit.
So, let's just call at six points I believe that is very real.
But I also believe that the folks were that are in our industry that we're up against are going to we already see them changing their game. However, this will be reform is very real and will have a meaningful impact on the underwriting results.
Okay. Congratulations again and thank you for answering my question.
Thanks have a great day.
Thank you.
And our next question comes from Christopher Campbell with KBW. Your line is open.
Hi, good morning, gentlemen.
Good morning, Chris.
I guess first question is did you guys have any lost creek, born or Michael or the hailstorm estimate.
Yes so.
In the quarter across across all those storms, including RVR at a grand total of $14 million. So.
Very very negligible.
Okay, Great and then just looking at the expense ratio improvement after backing out the profit share impact like how should we think about this without the noise going on this quarter, what would be a good run rate expense ratio.
Yeah. Good question, because there's a lot of moving parts in there the profit share.
Took the ratio down this quarter the net expense ratio. It took it down about eight and a half points. So if you just add back that back you're at 39%.
I think that with non Florida growth.
Happening as well as the new Cat program kicking in in the second half that 39, probably probably is in the 40 range going forward 40, 41%.
And actually.
If I could just take a second Chris to just clarify earlier I mentioned that 36% ceded premium ratio.
Let me just clarify that that includes not just cat, but also our 10% quota share our property per risk. So that that was an all in ceded premium.
Percentage at 36%.
Okay back to your question.
Okay.
Awesome and then question on based on I guess, what drove the difficulty in getting that that regulatory approval.
Well I think that our time schedule to try to get it done before July one was a bit aggressive.
We you know we did have the hearing that was delayed in part because there was questions on our form a application.
I guess when can you guys buy back and then how much excess capital would you have to buy back shares.
We don't have any update in terms of the buyback in terms of the excess capital.
We've got a lot of liquidity in the holding company both pre close on May sign and post close.
So so we have no update for you on that at this time on the buyback.
Okay, great and.
Annual shareholder meeting I guess, what are the plans to have that.
We anticipate announcing that shortly.
Obviously thats part of a ongoing conversation that we're having with one of our shareholders.
So we anticipate announcing that shortly.
Got it and I guess why was that one shareholder be holding up the I mean, I guess why wouldn't the meeting delayed from may to begin with.
Well you got to remember we were pending in acquisition here on mace on as well as.
Once again, I don't want to get too into the weeds on this but we've had ongoing conversations with.
With the shareholder whose.
He has got some thoughts and we have been very receptive to that dialogue and that dialogue continues. So it's all interwoven and we should be announcing that shortly.
Okay, Great and then just very very high level last question I guess your shares are down 40% year to date, you guys are 67% of book, which I guess would imply some dissatisfaction with existing investors I mean is fed nat opening to fend that openly open to having the strategic review or potentially considering a sale to unlock value.
I think we're always trying to create value.
We always work on plan, a which is growing the business organically.
And.
It being best in class in our service.
So our share our share price is extremely disappointing.
To our peer group the whole industry has been down in terms of the Florida five the five Florida companies the whole industry has been down and it's.
Without a doubt our prices been materially impacted throughout the year and.
We need to perform and generate the earnings or the share price is more accurate of the value of the company.
Okay, great well, thanks for all the answers best of luck in the third quarter.
Thanks, Chris.
Thank you and at this time I am showing no further questions I would like to turn the call back to Mr., Michael Braun for closing comments.
Thank you everyone. We appreciate your interest in fed Nat and thank you for being on the call. We believe we are well positioned to continue executing in the second half of 2019 and beyond we continue to enhance our profile through geographic diversification and the eventual closing of our acquisition makes on.
With the backdrop of the new AOL be legislation enacted where experian experiencing a more favorable operating environment than the local Florida market.
We continue to progress and pushing for the multiple positive developments in the near term, which we believe will result in stronger profitability for our business.
As we look to the second half of the year, our focus really remains on execution as we maximize long term shareholder value through our growth strategy. So thank you and have a great day.
Ladies and gentlemen, thank you for your participation in today's conference you May now disconnect everyone have a wonderful day.
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