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PTVCA Protective Insurance

Participants
Han Huie IR
Jeremy Johnson CEO
William Vens CFO
Brett Reiss Janney Montgomery Scott
Ron Bobman Capital Returns Management
Call transcript
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Operator

Greetings, and welcome to the Protective Insurance Corporation's second quarter 2019 earnings conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

It's now my pleasure to introduce your host, Han Huie with MWW Group. ahead. go Please

Han Huie

you the Thank call. joining this us Thank Insurance all Corporation for Protective conference second morning you. for quarter XXXX

the If live release, online to website we a which you you accessed presentation would to call, along receive like the call investor webcast available did release, and are at at today's press I earnings with copy an that may is be the hosting remind company's at of it for everyone accompany a company's which website, may access the not well. www.protectiveinsurance.com. as

time, to which the Reform the Private statements and certain would deemed not this Act At conference the meaning of of in management be like within are inform you call statements Litigation this during me Securities historical, that release, XXXX. press may made forward-looking

Although forward-looking any from cause can will detailed reflected the that and release Protective the statements assumptions, press the expectations in the no with risks from are be assurances Corporation Insurance it SEC. expectations included company's differ materially reasonable time expectations results to with are to that Factors filings give on in time are believes obtained. actual and based could

Johnson, Now and him. I Please like CEO to go call over of Jeremy would Protective Corporation, ahead. the Insurance introduce turn to

Jeremy Johnson

thank all and me for you morning this Good joining William morning. and

hard of long-term and to to and in to very build extremely balance position employees to the return who I'm profitability opportunity welcomed have have us to work excited the the execute strategic XXX and Protective to that at opportunity us importantly, my the in continue Protective, predecessor you to team sheet More and thank company's me for into immediate on confident on success. proud the work organization sustainable lead priorities. to our by the

and constituents rest with for understand year My customers and mid-May To my of partners speak and I to and steer disciplined distribution our advantage of industry. Protective and all we confidence can to strategy; for them; bring and the execution best focus joined shape in ongoing and with and in very build continue to meet priorities the and the talent turnaround bring threefold. the reward our credibility attract, and value through the retain since are to the culture competitive at to

optimize payment a to turn dividend our total now ongoing however, of was the the selection, and be earn the premium I'll to in year-to-date. by highlights quarterly strategy. X%. grew return in in for X.X% after investment Total quarter that pricing to and quarter little X.X% our share that I'm momentum the writing turnaround risk speak the the continued portfolio, book efforts value today then X.X% driven second for our and I'm the of confident the to rate, Gains report the profitably. quarter per in proud portfolio have are by creation on value investment about was will that we we and quarter and

well-balanced create is to portfolio well Our and value. positioned

Our X.XX equity. is leverage our investment times

quality. credit value create to in or of base solid in our securities a assets which held high investment XX% contributing are cash, and in duration will income the expect short million relatively and is growth we earnings $XXX book future. portfolio Our of fixed in

continued ratio over improvement. to at show and QX improved slightly combined Our quarter-over-quarter XXX.X%

still year, quarter a second facing not Although difficult relative this last as the climate. total environment do fourth in that to lightening we quarter we of and are severity a believe view was down during litigation the signaling the

a which year accident years, was is workers' development XX% GAAP picks by some prior in favorably All compensation Our reinsured conservatism offset in reflect loss reserving. than recognized years. which prior on In and in, in development more continuing favorable commercial still basis. auto, we of developed prior slightly

achieving at ratio million We're is increases compared down for consistent XX.X% QX auto to down and portfolio. our are XXXX. price XXXX. QX pushing $X.X with expense QX Our significant from Expenses in and commercial

varying our and and overall, that our the that keeping proud increase in of percentages customers high book, are by want. achieving we're business line I'm rate We of targets needs we

During the and of portfolio. all exit the over communicated decision administrator program quarter, to we in relationships, profitability production continue to in our two and we'll made lines unprofitable prioritize business

compensation. to to comfortable Turning In book. environment for continue workers' pricing aggregate, we the be our the compensation with workers'

diversification a have benefit insurers, for we that our the to we trucking different from particular workers' of employees, offer commercial compensation compensation While focus workers' and we also portfolio. of on many classes

are mentioned earlier, based priorities. turnaround on strategy a executing we I As seven core

are has team rate policies. with on We're two-year no these [indiscernible] excluding now for each. seeing the been progress and leadership our several and fleet pleased rate XX of increase in excess initiatives agency-placed months, offering and auto insureds medium level targets, we driving nearly two-year with The longer in guarantees. our portfolios, line This with I'm is

and limits volatility clients through program managing net are reduce reinsurance still decisions level structures. We using account reinsurance while offering facultative our to competitive thus exposure

for are I anticipate over XX months. next risk reductions at prior us on-board and $X.X and operating and enabling and necessary more take time without talent the hardening the will to same management This expenses from actions the the infrastructure in capabilities. analytics expense freeing technology, said, money elevating down reinvestment expense our million to further As us ratio our remedial enable I year up and

loss in decrease to very us investments customers, that to to analytics to time and advise a This better, data Protective. our ratio. us optimistic better and future. is believe good to will our data be I'm valuable their enable risks make more for make to I our Ultimately, them

stable at excellent a community. and sheet and to of committed and standpoint, proposition We base. wind a from loyal market strong a have and employees team and and rate a we differentiated back balance compelling the is have customer The value our trucking

to look will your I questions I following call that, the over forward and With William's to now comments. turn William,

William Vens

Thank Jeremy. you,

X.X share, second which per the $X.XX our income net million compares quarter in income or for As to per $X.XX or X.X discussed quarter. million press release, net of prior was second share year

million of X.X% X.X six net prior written income second the per XXXX, of or months to Gross first which For compares to XXXX. million or income year for share, the the quarter million for million XXX.X totaled increased period. X.X during share written the $X.XX to premiums of per net $X.XX compared XXX.X quarter

to the earned for our premiums increased growth The Net attributable to written quarter workers’ period. year million, X.X% first XXX.X XXXX for in months compared period. million XXXX during the XXX to compensation was up business. compared premiums six to the the increased to of current X.X% increase prior XXX.X Gross million

for mix the written for ceding of XXX.X increased differences compared during reflective well months the XXXX. earned earned six in first percentage X.X% premiums million is rates to differences premiums Net XXX.X the on the force. in in of difference business earned to XXXX compared million change the statement financial to compared as recognition normal reinsurance of in written as to of premiums The

an second X.X Our XXX.X%. the This million, in ratio loss the operations ratio XXXX. resulting a XX.X% of for combined a second for compares combined of quarter of produced underwriting to quarter of

a commercial months underwriting combined in of loss combined XX.X% For of year of accident months an in for XXXX, claims, severe in XX.X produced The increase operations combined resulting XXXX the loss reflects ratio a million, of the to and which current our XXXX. related of an compares increase ratio during including six the of ratio XXX.X%, six to continued the ratio severity. quarter automobile first second emergence first

the level in with commercial automobile We at continue rising severity ratios to expectations a maintain current consistent accident year loss sector.

accident year, more a As accident continue ratios passes, steady picks the trend. and time observed of at accordingly, adjust the we'll impact for our as loss learn relatively we either level or more But down now, about we year to relative the rate we of ultimate achievement up. our maintain current loss current to performance

to compared investment equity well to from net increase quarter partnerships average income XXXX. held an funds as income from short-duration, quarter flow, resulting limited of high-quality The Second a positive investment in net cash and investments in as bonds. the second reallocation increased in increase reflects invested, XX.X%

income XX% income net months XXXX, continue compared six net XXXX. modest. of in be increases future to For investment the expect do We investment first to more to increased

invested to positive cash increases higher continue from do resulting expected expect flows. further future we due to However, assets

portfolio past has cash, the relatively duration effective year, of an fixed at duration, including approximately level remained Over our income X.X.

Our high-quality AA-. of average cash, rating, has weighted including fixed income portfolio a

actions rate million equity During company limited sales six as from we lower XX.X equity months approximately and corporate income the partnerships reallocated into when benefited short-duration opportunistic of low stocks XXX fixed of were basis the new securities. tax in first our were predominantly These income XXXX XX%. securities. tax distributions XXXX, the approximately the from fixed throughout million of investments reallocated is of with including consistent investments, duration This reallocation short equity

investment were these more reinvested limited Proceeds sales to fixed securities, well the shifting as into short-duration distributions high-quality, our a conservative portfolio income posture. from still as partnership further

In income to these accretive from sales limited securities additional held addition, investment were relative income assets the income given partnerships. fixed to within

are cash financial XX, quarter, the to in once again $X.XX Operating Moving supported the to the do ended of value increase share for share XXXX. the per cash note dividends during sheet. XXXX. months payment at XXXX six per of after flow per cash months $X.XX positive Book resulting June of was an of during June by a was six XX, million June second our We totaling our positive very operating balance position XX.X XXXX operating shareholders that on X.X% $XX.XX, continue initiatives or XX, first flow to strong share.

Our investment portfolio quality. high are assets

which, occupational our now those which serve significant liabilities are remainder and protection, XX% The our are performing accident workers' of for reserves cover reserve by Half effect, development reinsurance with of as coverages, in compensation reserves. are treaties stop-loss a covered expectations. on within adverse

a our reminder, reviewing at results quarter website financial we posted our and This statements our press commentary. our www.protectiveinsurance.com. a on formal presentation brief quarterly release, second As concludes

we'd questions. At time, be take happy to this

Operator

Montgomery first [Operator coming from Janney today question Brett Instructions] is Reiss Scott. from Our

Brett Reiss

decline in quarter sort Mr. Johnson, can great. went trend. of in But the easy want the the quarter, combined look pounds weight, pace to second quarter forward where we the XXX.X are X it's think it to? of fourth combined continued in then like the XXX and ratio you do losing tougher decline tougher? the so gets XXX.X first What and first to trending it we the ratio in is to It's from

Jeremy Johnson

we've amount first get Great is the year. question. tell the six you able been What of would seen escalation this months we've fairly rate of significant that I during to in

in rate the than rate in cetera, et rate greater increases the the cetera. quarter the et XXXX, the than were increases were of first So fourth quarter quarter, the greater second increases in

being things on a we should ratio XXXX business And year increases so I'm you there will renewed premium through, higher-rated the therefore, The XXXX months. the the in as in combined of ratio, recording books, earning that all of QX the and get XXXX loss and through QX have put saying? XXXX. X be big earns accident So equal. of rate what QX we've we that business lower there than QX more in be was been last already accelerating over Do and of

Brett Reiss

Okay. it Were you that XXX from to XXX.X? went pleased

Jeremy Johnson

pleased certainly I'm other didn't it Well, go the direction.

in logical rates -- of XX% getting the it on think total we I portfolio, was our of combined commercial yet. significant majority We're about haven't the that's for The we're auto second the increases and earned do getting mathematically, portfolio. through to did quite just rate what our quarter. need it

earn in of to significant commercial it's each on getting our XX% rate we're portfolio, So going quarter. but

in earnings de So of increase of minimis. is the quarter effective amount fairly this rate that

So significant that quarter have to have in only decrease second not not due it rate, the the loss come yet. expected was ratio. have through If would I a expected I would to in

Brett Reiss

on ability impeding Okay. room plenty question to We've it our the to ratings? And buybacks. share a without got do continue of

William Vens

Mr. William. Reiss, it's

mind certainly our to So we we for want how of but speaking bear in A.M. in the absolutely we Best, allocate context capital. don't be ratings

at see talked very about our in these we've prudent don't that capital and as we As calls, we with levels stock see changing. prior management, attractive consistent

Brett Reiss

what the share buyback remaining is just And Okay. authorization? on

William Vens

continue the for will actually repurchase the Board We They've to and of that so. make million we when we just That yesterday. we if XX decide of plenty just That, was doing to XX have sure mean allocated course, months. next million. does want not to room renewed continue repurchases by XX

Operator

Ron is [Operator from Capital Instructions] Management. Our from question coming next Returns Bobman

Ron Bobman

thought they guess, Jeremy, commercial book, to out for as talk I team you are sort auto could on how retentions, relative of rate the you be about plan increases? the underwriting playing you what really would and

Jeremy Johnson

Yes. amount They given are an now acceptable at level, of the rate.

on where count think policy of a or lot premium. That's an give quarter, a were in both are, I was mid-XXs first they noise. from retentions where and Our take, improvement a quite there the

we the the rate continue improved, to market business one, ability the think retain and to as portfolio it's and conditions has our that I well, increases on improved drive So harden. want

the of books talking for heightened seeing trends environment litigation as more competitive about are, driving which most the So we and same somewhat rate. is in environment pushing and a is their

So frankly, one, hiring strong surprising our I to we proposition market. two, customers partners commitment and and also, demonstrate ask stronger, continue our emphasize not And in our as value distribution with for behavior in book the is rate. we're and CEO; business the we, responsible think our to the the of a when

Ron Bobman

surprised role role the on the our a buyback. a opportunity. and adherence to follow-up just and plan I'm A.M. Listen, underwriting to thought about It sort had a the and the answer like that little the play bit respect opportunity the dwarfs And would of by one the ratings But I very and much that of really relative and of aware the was bit valuation of what on answer appreciative Best that a given I'm that return questioners has prior it's I even the little candidly play. tangible seem wishy-washy a buyback book.

So or a shot forceful of would I'm little surprised position misunderstand in bit that I another at regard. that take there it? Did you more wasn't a

Jeremy Johnson

other for misunderstand, direct. thank No, a exceedingly have and you me call someone candor. did It's to actually delight not you your something than

shares commit be that, to our next set to year. an these if levels, not opportunity allocate we've So have is actions and part, time, and more attractive it a and continued you and the continued that We're our right. in consistently going very going see is the we to to don't capital -- maintain our call to at the particular at want importantly, how appropriate you're maintain the relative quarter is amount our to we we just to to way But or wishy-washy allocate it per capital. over value

opportunity both you. to our We the relative the it repurchase set will the Thank at and take in side time. underwriting

Operator

floor any Ladies our the [Operator closing like to reached gentlemen, session. turn end back we I'd for question-and-answer to or Instructions] the comments. of further over and management

Jeremy Johnson

Thank shareholder time you the our and support again for the base. from

Operator

you. Thank teleconference. That does conclude today’s

day. you participation We this at for and have disconnect may You time a line your wonderful your thank today.