Release Date: October 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Net income per share increased by 124% year-over-year, with adjusted net income per share up by 19%.
- Strong operating results and a decrease in interest rates led to all-time highs in book value per share metrics.
- Ongoing initiatives to reduce underwriting and general administrative expenses have been effective, with the ratio decreasing to 23.2%.
- Net investment income increased by 3% due to higher yields on fixed maturity securities.
- The company returned $15.1 million to stockholders through share repurchases and dividends.
Negative Points
- Gross premiums written decreased by 8%, primarily due to lower final audit premiums and endorsements.
- Losses and loss adjustment expenses increased to $118 million from $115 million a year ago.
- The current accident year loss and LAE ratio on voluntary business increased slightly to 64%.
- Audit premiums decelerated during the third quarter, contributing to a decrease in net written premium.
- Growth in the third quarter was not as strong as previous quarters, partly due to smaller policy size bands.
Q & A Highlights
Q: Your appetite expansion, the 7% year-to-date, I think that maybe it was a little bit less than the third quarter. What do you think the growth prospects are, just the pace of the appetite expansion? Has that sort of run its course and you need to take another look at the market and look for some new class codes? Or how should we think about that?
A: Katherine Antonello, President, CEO: We don't believe it has run its course. Our appetite working group is actively seeking new class codes that align with our strategy. We continue to expand and also reassess underperforming class codes. We aim to grow profitably and will continue this strategy into 2025 and beyond.
Q: The audit premium in 3Q, it sounds like it decelerated a bit and maybe it's picked back up in October. Is there anything you've been able to put your finger on as to why you saw the lull in the period?
A: Katherine Antonello, President, CEO: We haven't pinpointed a specific cause, but economic factors may have contributed. The NCCI's recent report noted a slowdown in the labor market over the summer, which aligns with our observations. We expect more volatility in employment growth, impacting audit premiums.
Q: Anything from your payroll partners around that similar lull of pace of new business? Anything to divine there?
A: Katherine Antonello, President, CEO: We haven't received specific feedback from payroll partners. Our growth remains widespread across channels, with significant growth on the digital side. Notably, our policies in force increased more in Q3 2024 than in the first two quarters, driven by smaller policy sizes.
Q: What's your prognostication for what the NCCI will come up with in terms of aggregate loss costs? When we think about 2025, how do you think that will trend?
A: Katherine Antonello, President, CEO: Current filings effective 1/1/25 show continued downward pressure on loss costs due to decreases in frequency and moderate severity changes. We adjust our prices appropriately for our book of business, except in Florida.
Q: Are there any further questions at this time?
A: Operator: No further questions. Kathy Antonello, President, CEO: Thank you all for joining us. We look forward to discussing our year-end results in February.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
