Presurance Holdings, Inc. Q1 FY2023 earnings call

• Strategic decisions to improve business mix by focusing on select profitable verticals and strengthening reserves have positioned the company for profitable growth.
• Execution of the loss portfolio transfer reinsurance agreement for liability lines from accident years 2019 and prior is already yielding benefits in Q1 2023.
• Underwriting enhancements include using tools to predict claims based on factors like demographics, location, and previous claims history, leading to tighter terms, improved geographic distribution, and rate adjustments.
• Focus on key specialty verticals has deepened expertise, improved operating efficiency, and led to better customer service and underwriting results.
• Claims are trending favorably with open liability claims down 42% since Q1 2019.

Gross written premium for the first quarter was just over $36 million, a 10% increase from the same period last year. Commercial lines accounted for 80% of total gross written premium, amounting to $29 million, and reported a profitable combined ratio of 97.6%. Personal lines, making up 20% of total gross written premium, had gross written premium over $7 million, a more than 65% increase compared to the same period last year.

• Management is confident favorable results from strategic initiatives will continue.
• The company will continue to invest in the business and explore opportunities for logical growth.
• Focus on underwriting discipline and strategic decision-making will drive sustainable growth and profitability.

• Reinsurance market was extremely difficult at year-end, particularly for property due to events like Ian; property excess loss contracts were impacted, though expecting relief in the near future.
• Competitive environment in some specialty commercial lines, with some new entrants in casualty E&S markets, though no dramatic impact on pricing yet.

Q: Could you talk to both commercial lines and personal lines separately about the amount of premium growth generated by rate increases versus exposure growth over time?

A: On personal lines, a 10% rate increase in Texas homeowners and 12% in Oklahoma, with growth from both exposure and rate. On commercial lines, property renewal rates up 7% y-o-y, GL rates on hospitality up 4% y-o-y, small business closer to 13% y-o-y, with a mix of rate and exposure growth.

Q: Remind us of where is sort of your reinsurance usage and what might happen prospectively if the hard reinsurance market continues?

A: Casualty reinsurance didn't change much, but property was impacted due to events like Ian. Expect relief on property side in the near future as experience is good otherwise.

Q: Any changes in the competitive environment for your parts of the specialty commercial business?

A: Varies by geography and focus; less competition in hospitality, some new entrants in casualty E&S markets, but no dramatic pricing impact yet, with more competitors in the marketplace