
Financial Data and Key Metrics Changes - Gross written premiums increased by approximately 19% year-over-year, leading to greater net earned premium growth and a reduction in the expense ratio [7][24] - The combined ratio improved to 104% in Q4 2021 from 111% in Q4 2020, with an overall loss ratio of 62%, down from 67% in the same period last year [24] - The company reported a net loss of $801,000 or $0.08 per share for Q4 2021, compared to a net income of $3.3 million or $0.34 per share in the prior year [28] Business Line Data and Key Metrics Changes - Commercial lines represented 88% of total production, with gross written premiums up 10% to $29 million in Q4 2021 and up almost 14% for the full year [12] - Personal lines saw a 63% increase in premiums for Q4 2021 to approximately $4 million, and a 75% increase for the full year to $15 million [15] - The combined ratio for personal lines improved to 77%, a significant improvement from the previous year's ratio [25] Market Data and Key Metrics Changes - Michigan gross written premiums increased by $6 million or 26% in 2021, indicating room for continued market share expansion [13] - Hospitality premiums began to rebound as COVID restrictions eased, contributing to overall premium growth [14] Company Strategy and Development Direction - The company is focused on optimizing its business mix and expanding its book of business in profitable lines [8][10] - Management emphasized the importance of driving bottom-line profitability for shareholders while reducing exposure to lines that have negatively impacted reserves [31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving a sub-40 expense ratio by mid-2022, with expectations for continued top-line growth [35][36] - The competitive environment is described as firm, particularly in property lines, although some softening in rate increases was noted [37] Other Important Information - The company recognized a $1.2 million increase in the fair value of equity investments in Q4 2021 [27] - Total assets were reported at $290 million at year-end, with a book value of $4.17 per share [30] Q&A Session Summary Question: Outlook for the expense ratio becoming sub-40 - Management expects to see below 40 expense ratios by the second quarter of 2022, possibly even in the first quarter [35] Question: Competitive environment and rate increases - Management noted that while overall rate increases may not be as significant, certain lines continue to experience strong rate environments [36][37] Question: Details on commercial lines reserve development - The QSR line was highlighted as the largest area of reserve development, particularly from accident years 2018 and 2019 [40] Question: Concerns about litigation environment - Management acknowledged a combination of IBNR and increased litigation costs affecting reserves, particularly in Florida [44] Question: Changes in reinsurance and ceded premium - A new reinsurance treaty effective December 31 caused an increase in ceded written premium, but it is expected to have minimal impact on the bottom line [50]