Release Date: April 01, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Jessica, with your insurance background, what structural changes do you think are necessary for Open Lending to improve its economic model? A: Jessica Buss, Chairman, emphasized the need for an insurance-type approach to pricing and claims operations to enhance predictability and reduce volatility. She plans to implement a more sophisticated, segmented, and real-time pricing model, similar to insurance companies, to better manage risk and improve unit economics.
Q: How much work and investment are needed to achieve these changes in the company's infrastructure? A: Jessica Buss stated that the infrastructure and tools are largely in place, thanks to the team's efforts. The focus will be on enhancing data collection, predictive modeling, and real-time performance measurement, rather than large infrastructure changes.
Q: What is the remaining exposure from the profit share and make-whole agreements? A: Charles Jehl, Interim CFO, explained that significant write-downs have been made on the 2021 and 2022 vintages, which accounted for 40% of the negative change in estimate. The principal balance details were not immediately available, but the adjustments have been substantial.
Q: How will the adjustments to credit builder trade lines affect the addressable market, and where can you offset the loss of these customers? A: Jessica Buss noted that while these adjustments will reduce the volume of certain high-risk loans, the focus will be on quality over quantity. The company aims to attract better-performing loans from credit unions by offering more appropriate rates, thus optimizing the portfolio.
Q: How are the insurance carriers performing, and is there any risk to the 72% profit share? A: Jessica Buss confirmed that the long-term profitability for insurance carriers has been strong, and there are no discussions about changing the profit share percentage. The carriers are pleased with the overall performance and are eager to continue the partnership.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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