Financial Data and Key Metrics Changes - Core income improved year-over-year from a loss of 1 million in Q4 2021, and quarter-over-quarter from a loss of 1 million in Q4 2021 [6] - GAAP net loss for Q4 2021 was 0.05 per share, compared to a loss of 0.79 per share in the previous year [13] - Ceded earned premiums increased by 196.8 million due to more business being ceded via reinsurance programs [16] Business Line Data and Key Metrics Changes - Personal lines premium mix improved from 75% to 63% in 2021, with a target of achieving a 50-50 balance with commercial lines in three years [8] - Commercial lines premium ended the year up nearly 20%, with exposure approximately flat [10] - Average rate increases in personal lines were 11.3% in Q4 and 11.5% for the year 2021, with expectations for continued significant rate increases throughout 2022 [9] Market Data and Key Metrics Changes - The company has reduced personal lines total insured value (TIV) by 44% through the sale of renewal rights and ongoing exposure management [8] - The underlying loss and loss adjustment expense was 1.6 million or 2% year-over-year, resulting in an underlying net loss ratio of 52.7% [18] Company Strategy and Development Direction - The company aims to achieve a balanced risk portfolio between personal and commercial lines, with ongoing exposure management and risk selection [11] - The strategic plan includes a focus on underwriting profitability in 2022 and targeted return on equity (ROE) in the mid-teens by 2023 [7][32] - The company is transitioning away from certain regions, impacting gross premiums earned and net premiums earned [30] Management Comments on Operating Environment and Future Outlook - Management noted a downward trend in the frequency of new lawsuits filed in Florida, which may improve the operating environment [21] - The company is actively monitoring legislative changes in Florida that could impact the homeowners market [26][27] - Management expressed confidence in achieving underwriting profit in 2022, with a focus on de-risking and deleveraging the portfolio [32] Other Important Information - Total assets were reported at 965 million [23] - Operating expenses decreased by 26% year-over-year to $72.9 million, driven by higher ceding commission income [22] Q&A Session Summary Question: Insights on Florida homeowners market legislative changes - Management noted a reduction in new litigant lawsuits and mentioned ongoing monitoring of legislative proposals that could improve the environment [26][27] Question: Underwriting actions for 2022 and 2023 - Management highlighted approximately 60 material underwriting actions taken over the last 18 months, including improved assessment of roof conditions and withdrawal from non-scalable products [28][29] Question: ROE targets and expectations for 2022 - Management confirmed ROE targets in the mid-teens by 2023, with a focus on achieving underwriting profit in 2022 [32] Question: Impact of reinsurance and modeling underlying loss ratio - Management indicated that the June 1 reinsurance renewal will be key for 2022, with expectations to fare better than most regarding potential cost increases [33][34] Question: Expected RBC levels and capital contributions - Management stated that all carriers are expected to have RBC in excess of 300%, with some needing additional capital contributions prior to filing annual statements [35]
United Insurance(ACIC) - 2021 Q4 - Earnings Call Transcript