Release Date: March 11, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Real quick on the California fires, was that just the underwriting type issues? Or have you guys been trying to get rate increases and deal with that issue? A: We've had an outstanding rate increase for our vacant express probably for a year plus at this point in time. Like most carriers, it just stalled completely in the regulatory environment. But otherwise, it's a sizable loss for us, involving very few properties, less than 10 overall.
Q: Could you provide a little more color on the reinsurance segment and that growth in that? And what is the plan? Could that continue its strong growth in 2025? A: Yes, our growth there is significant. We have 16 treaties at this point, roughly $45 million in force, and we expect a nice increase in '25 and '26. We'll evaluate our other lines of business and capital allocation to decide on further growth.
Q: On the project manifest, do you see any benefits yet on the destocking of the organization in terms of ability to move capital between organizations? Has that kind of started yet? A: Yes, we picked up dividends to the holding company, about $50 million. Our statutory surplus is around $500 million, which gives us more capacity in the insurance market.
Q: With $255 million in discretionary capital, any portion of that could be used to buy back the stock at a discount to book value? A: Of course, it could be used to buy back stock at a discount. However, the Board is more enthusiastic about adding additional products and underwriting types through Penn-America. We expect better returns from growing our insurance business in the short term.
Q: Could you tell us what your total exposure is in California? And is it on the direct commercial side or mostly on the reinsurance side? A: Our total exposure in California is about 6 basis points of the total property market. It was all on our direct book, not on any assumed reinsurance.
Q: Regarding Project Manifest, GBLI has tried growth strategies in the past and failed. Can you explain why your growth strategy will work this time? A: Our new structure allows us to bring in additional underwriting teams coupled with technology investments. Previously, teams operated in a manual environment without tech support. Now, our technology investments create a platform for offering new products to existing and new partners. We also brought in a new individual with experience in products we don't currently offer.
Q: Is there room to reduce the expense ratio without compromising underwriting quality? Any uses for excess capital, maybe a special dividend? A: We don't currently plan any special dividends. There is room to reduce the expense ratio as we run off terminated business. We aim to bring the expense ratio down another 1 to 1.5 points over the next couple of years.
Q: Anything abnormal in the Q4 corporate and other operating expenses wraps to $7 million for the Q? A: Yes, corporate expenses are up $5 million due to professional fees related to Project Manifest and implementation.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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