Kemper (KMPR) 5 Nov 222022 Q3 Earnings call transcript

Good afternoon, ladies and gentlemen, and welcome to Kemper's Third Quarter 2022 Earnings Conference Call. My name is Drew, and I'll be your coordinating your call today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at the time.

As a reminder, this conference call is being recorded for replay purposes.

to Kemper's host Relations. Vice like call, today's now Guerra, Karen President would introduce for your conference I of Investor Ms. you may Guerra, begin.

& discussion and Jim from Officer; Kemper's Joe Division Good welcome Kemper's Chief President, Casualty XXXX operator. Financial everyone Officer Lacher, the Executive This of and Executive Vice Executive Kemper's and Chairman; results. hear you, Sanders, quarter Kemper's our Vice and you'll Thank afternoon, Property Duane Chief President third McKinney, afternoon President. to and President

We a around opening the to our session. remarks third a open for will then few make provide quarter context results call Q&A and

the During Executive of Kemper's Vice presenters our President and will Officer. call, be interactive Chief by Boschelli, portion joined John Investment our

earnings and earnings published After the release markets and financial and closed presentation Form XX-Q. our our today, supplement issued we

can You kemper.com. site, Investors these the on find our section Web of documents

of of but operations company's Harbor Our its of Securities and Litigation contain the discussion today future outlook may financial Act Safe These statements within of to, the results the Private not meaning limited XXXX. the statements provisions and forward-looking conditions. Reform are include,

be actual by and future may also condition materially the these Our statements. may statements COVID-XX financial from pandemic. These differ results impacted

additional that as on Form XX-K impact our release. statements, these as third forward-looking refer information For risks well to may please our XXXX quarter earnings

we and financial required release, SEC believe to non-GAAP investors. meaningful GAAP earnings where measures defined In all are discussion supplement, with afternoon's in we non-GAAP financial earnings includes the to This presentation financial also and rules. measures our accordance the have reconciled

be of otherwise comparative our these XXXX documents of All the to Web will stated. the kemper.com. site, unless corresponding find section Investors period, references can each You on

to turn now I the over will call Joe.

everyone you, and our quarter Good Karen. afternoon conference call. welcome third Thank to

for two areas some of start strategic results for of on are update. the going highlight also to initiatives our call, quarter, main strategic context I'll by a In addition providing series today's we're financial that the to underway. our

the initiatives and business of second, operating our model. sharpening our specific First, focus; to enhance

intent, fuel profiled and our we've differentiating of X, that capabilities team the our our culture Page businesses. characteristics On foundational strategic target markets and and it,

we where or or customer systematic, As improve and better have our our capital pricing. can are specialization sustainable require reminder, focus customer on energy lives underserved we competitive that favorable build markets understanding a advantages, and offerings and through

target Kemper demonstrate that Life and completely and builds is our protection capabilities more better these businesses, needs In Auto attractive focus have of our that differentiated than Kemper leading our franchises at provide off both tailored customers' how leveraged we to valuable our unique meet competition. prices. services

or of of determine portfolio As if portfolio process, the if our planning deliver by they a are being our advantage better the part to we businesses of part of portfolio better. competitive review and made businesses our our either rest annual make

a As our of auto Kemper initiated and result review we've business. Insurance, Personal preferred this, a of strategic home

This update to includes We'll information or of potential further segment. divestiture have provide a to components share. more a segment when of the we restructuring

subsidiaries, otherwise its as on Medical quarter. the remains of Reserve Mutual known in Ohio fourth close and National to Insurance Health, addition, of Kemper In the Company sale to track

productivity component to enable have within initiated to several key we and our businesses. model Moving update, strategic core enhancements of second the our additional operating growth

possible to to our optimize for price, meet at to usage. we're ability customers' ensure capital the needs ways always have we lowest First, looking the

we've of a established that an end, capital. amount has trapped that To captive unlocked offshore substantial

enhance exchange. reciprocal improve process This Additionally, lower we returns cost capital, are a of on creating will of pricing, the and the reduce earnings customer in volatility equity.

The era, thrive costs in advancements. accelerate these across cumulative will we're best and our the post restructuring organization initiatives our a is reduce program business ensure Finally, announcing to pandemic result capability to of positioned that rapidly actions with a share in anticipated meet franchise strengthened from more a on and this position these will customer improving the in current benefits needs. later details result to profitability Jim presentation. future and will

that Moving quarter's X showed progress ongoing results to Today, to highlights. toward Page we restoring profitability. reported review the

again benefit and of cumulative our we accelerating exceeded year planned taken rate-taking P&C forecast. the to actions quarter, earn-in non-rate continues This The rate pace. in over an past the

Although severity previous than it elevated, inflation incrementally, severe remained was quarters. in less

our profitability underlying further remain grow We franchise. work accelerate laser on our and ultimately focused both improvement to

auto. have than are accelerating. the anticipated more incremental impact. offset the Their in They have cost personal actions to particularly loss pressure, Our specialty benefits continue

XX% in private I'm We with cumulative Since passenger combined points total book. results underwriting of of into will XX progress July impact confident XXXX, to these next quarter, year. actions received auto auto on our book. non-rate earning this the X.X restore displayed of written financial Kemper saw our the actions profitability rate cumulative rate of Auto points with

direction. improved in profitability profitability declining yields. in right only segment, addition, In Life Health the will And I model operating in enhancements higher further trending certainly, from & our the mortality see things advance gains. and investment

now over discuss the to to I'll Jim details operating on turn results. call additional

X the insurance begin industries to impact continue Ian. with The and financial ongoing Kemper's results. P&C elevated mortality and Thank Hurricane results. severity our environmental factors inflation, Life on Page consolidated Joe. trend Notable you, I'll include challenges facing

XX Ian. share. net share of the and to losses loss business This Hurricane an $X.XX per diluted backdrop, continue quarter, loss to capacity of operating to was approximately generated and Against For progress diluted the we this make adjusted consolidated restoring $X.XX XX we related million, profitability. million of included which a per net of

life ratio, mortality. and profitable passenger X.X auto due Highlights include combined million commercial a decrease quarter lower to improvement policyholder X-point the sequential vehicle, Auto in benefits approximately strong growth in Kemper in continued private underlying

our continued to through between pre-pandemic move provide margin widening. mortality trends ongoing items to moderate Life improvements. In note the continued profit items underwriting This P&C the accelerate. to is ongoing lead levels. and Within would that profit I restoration continue to will profitability Next, rate spread & severity trends improvements. our these Together, tailwind segments, continue earned a and Health,

had prior we quarter, of million favorable the in development. X roughly year Finally,

these For million demonstrate outcomes the favorable of approximately our year, quality analytics dynamic transparency. have of In commitment and the year operating we development. and environment, this XX to prior information, challenging

X. Slide a few to We key Moving highlight updates.

quarter our of holding ceded substantial This initiative our and a resulting XX% in newly captive. Life liquidity company, dividend this capital offshore unlocks to $XXX business capital we the enabled wholly-owned, established and First, extraordinary to additional availability. million

to of with in the and million Second, principal capital long-term Correspondingly, gains to we remain February XX% to income XXX committed the XXXX debt excluding fixed debt unrealized to have connection eventually our we earmarked losses. refinance reduce target will we XX%, maturity.

and the effective million. as rates XXXX XXXX between to new method. using an the September Discount Kemper XXX increase guidance shareholders' modified Third, retrospective January is X, XXX adopting accounting of XX, of in LDTI equity million result

a our align philosophy management to liability and liabilities. As closely Life our reminder, aims asset assets

to short-term We income to accounting is valuation is liability asset to volatility. economic Short-term A rated than evaluate limited valuation to Life less managed and the volatility XXX economic both Potential rate XX liability views mitigate and fixed relative eval customers using risk annually. million million.

our in million. During asset management XX equity of gain approximately an quarter, the philosophy resulted liability

to our liquidity X. of million driven by ratio Bermuda increase and quarter Life and relative Health quarter, we liquidity improved from The to the significant Page third dividend. of XXX% RBC nearly We XXX the a balance capital At in to also second & held reinsurance healthy liquidity aforementioned the the positions. XXX%. was billion. Moving maintained impacted Life X.X end initiative The

debt LDTI impact The losses, and from reduction debt targeted over to long-term ratio, the excluding the to and and reduce us to long-term debt capital transition using next initiative Further points. our repayments cash fixed flows debt gains debt The range of capital net to by on hand will couple to our of to the XX% target. improved operating X.X are approximately to ratio cash income above enable XX% return is previously years. capital mentioned expected target

XX X. Net investment quarter for the Page Turning income was to million.

yields XXX to reinvestment are our leading XXX estimate million million to of basis X.X%. up points prior to investment portfolio We XXXX. equivalent in book XXX year, income will XXX over pre-tax to be fixed subject the yield annualized a of New

New future XXX portfolio investment higher maturing income. expected to investments next will year. to relative This basis yield core money over the net provide to improvements yields are points the incremental

now the provide details to to call on Duane our over P&C segments. I'll turn

Jim, everyone. afternoon, you, good and Thank

our Moving details. XX, P&C more with points. X incremental of offset Specialty improvement we'll ratio through combined to actions. severity quarter begin business We in the Specialty and underlying the auto Page non-rate experienced experienced than sequential we rate

the for in-force about premium X.X% policies year-over-year segment, same down the For period. and XX% earned declined

an auto, of XX% the X% on quarter, the we file the an filing book. plan to fourth on private in for additional additional passenger quarter. for exceeded rates, X% filed expectations We This of XX% book for our

increase from an of this actions more The of additional improvement X.X to are than X fourth earned normal fourth to In rate in earned we expected have point and points offset trend with points stage, of X.X we underlying earned net quarter, least PPA's quarter. rate, benefits expect incremental seasonality ratio. incremental sequential at At last leading combined underwriting of quarter points X.X rate. the

business. build rate continue strong net quarter ratio, XX.X%. The including year-to-date business combined vehicle us seasonality, our XX%. profitably commercial achieve Our in third The is to in-force of continue underlying and grew ability momentum business strength to enable premium continues underlying this grow policies XX% Year-over-year, to with and to model grew to the results quarter. the will

to metal in slight let's auto increase turn combined points, XX. increase seasonal ratio claim by Page Preferred activity underlying severity. BI Now X.X sequential a experienced driven of and

actions. towards We continue severity progress non-rate rate make to through and offsetting

an file points the the XX% auto and of our book at have to the in for rate quarter Looking earned the rate an quarter. We're rate. of fourth additional book on on we of chart of X.X right, additional filed planning third of XX% upper the XX% X% during on preferred

X.X of in expect also rate earned fourth quarter. We points the additional

to book, time into the the take pace throughout run will and XXXX. actions fourth in Although accelerate quarter will the

now back to Joe. the call I'll turn

Thank you, Duane.

Health on & Turning Life to our Page to improved two XX. due items. segment primary Profitability

two decline. declined. towards levels. quarters national We've of mortality trending Consistent pre-pandemic with is sequential trends, First, experienced above but COVID-related levels, back pre-pandemic mortality now

portfolio solid by spread investment a high quality Second, increasing new and money had margin. long-term performance we yields driven

exceeding approximately are by XXX maturities yield rates New points.

this a Additionally, provide occur back to the anticipate restore its business sales Life tailwind the will From half rate in to a of perspective, profitability. items be These pre-pandemic of to favorable levels pre-pandemic business we XXXX. levels. new continue run at

I'll back share initiatives. the so now additional details Jim the to he can strategic on call turn

Page Moving XX. to

our we enterprise include will advantages our total, outline path and enhance in competitive LAE, expect million. to that expense accelerate profitability. These and In within spend expense excess strengthen target estate. real optimize savings annualized to we Here to achieve XXX and initiatives of programs

three next to this years. A these in XXX that to our is earnings fruition tracking, bring will enable quarterly table be savings over to charges between be million million To provided pre-tax non-cash. cost the the updates. of will is portion on page The expense incurred with XXX this

are The underway. here actions displayed

We to by in earn savings of benefits and these fourth benefits in the the with to then quarter. XXXX. start realized The XXXX end 'XX of be some majority will additional expect of

to Turning Page XX.

the discussed example P&C of of Erie. previously start model this we incorporation is with through transformation models businesses reciprocal fee-based the the I'm As performed going An offshore of our a to captive, to exchange.

If you're an with this alternative structure it's not way company. an insurance familiar to model,

will period, have configuration, fee removed of seven-year owned services by We'll will from of paid deployed activities. we we and up currently Over will these we day-to-day expect carrier be the underwriting Kemper In be support for capital a be risks. the a this five this underwriting over responsible our XX% management to a to free for policyholders.

In that use addition, pricing. it we'll to advantages will provide meaningful tax optimize

our to third insurance We're further anticipate to updates to year process, to back will a business to continue will carrier the at calls. we're excited capital perspective, prospects We take stage this and on and us [indiscernible] end. plan before largely model, of be release write subsequently sufficient for aforementioned for then quarter the become about an on the regulators it submit consolidated. of planning ended From the to advanced due time The be long-term self investor provide we'll XXXX. timing of to and tend beginning the

the Joe for turn call now I'll over closing remarks. to

Thanks, Jim.

new As a Board. ESG disclosures the with our Sustainability Accounting transparency XXXX Standards Updates reminder, our include published aligned enhancement report. we to recently to ESG

You more the report these on in available can temper.com. about read topics

specialty us and the company we core market that improve us and our ease-of-use our to to share our improving like and in and long capabilities markets. reiterate serve underserved announced enable are our the of advancing our margins. continuously We're strategic businesses need that I'd platforms that affordability aimed strategy today to initiatives the expand at and over term strengthening enhancing and better closing, continue help will In

lower to the reduce customers shareholder offerings better significant enhance customer provide risk We employees product needs us value. and aim This and costs, long-term position requirements, will our profile. our to and capital decrease of serve

will Finally, underwriting stronger I'm necessary confident profitability, our and make results generate us organization. restore actions to a the

have cost X.X have Further, auto that actions fact advantages. earned running line through next expense of personal by will through of our capabilities miss we'll advance will year, at this we rate running these least already our Today, the model points earned books. rate time points books. effective initiatives based drive further XX Don't enhancements and our operating on

As ensure employees customers a future. strengthen bright our our for company, want thank our and always, to to I continuing serve

I'll call for now the operator turn the over questions. to

you. Thank

Q&A [Operator today's Instructions]. session. start now will We

question first Raymond Greg from from today Our comes Peters James.

line now Your open. is

everyone. afternoon, Good Hi.

first would the deck. I insurance segment. start and information, just I P&C my question specialty the guess of lot a appreciate So in off slide

reported reserve quarter. charges. and seemed you adverse your this of peers Some like some have that development some It avoided continuing

maybe And still rate, at on your secondly So like the opportunities. there's XX, you looking rate seems the Page state some comment put then of on it could that reserves? you on table

some give state? So what's on by us going color maybe you can state

Jim. sure these Big be understand pretty and to terms And We'll try things at. that we've us through. question. with missed of rate. data Greg, to into from picture good a have those viewpoints. in team, of we reserving indicated if or and tag look a that there. something each make enables secondarily, pick, lot when watch XX% underlying are reserve come pick a day-in Obviously, things going. and forward Okay. jump in you on comes generally especially that a the can is things XX/XX that a from I'll will to this Duane up and like confidence, pick. quarterly we I'll for have feel view day-out in very that on and We fruition. environment to to are of We there's this try true of a get about we with basis to And a of an folks, quarterly included confidence have those has perspective think perspective, I a a basis start remind where in on thoughtful as to pieces the that, we we're plus where kind our previously, follow Joe what to the

together and I don't our want say, of balance a, there's in consistency reserving we of because ratio think confidence both philosophy our can picks apply our of conservatism I the it's those to the elements the which good So highlight sheet. and with come you have to that. But to quality loss kind why quality

XX. take of comments take see a to lot a been I'll Slide only on Greg, shows continue and rate. rate start, on three additional we've piece there's a of if after. taking lot the quarters and Look, This will rate

there's try sort there cumulative that information. why sort ones that's for we that present historical the a But running here forget, and took totality. don't the have We off of rolled that is of what's year rate over didn't page last half through. So been gave I the you to that in

We they're full taking rate are taking whenever in available, more. our of outside indications California states basically and

that rate there's story this an news The for particular the there's at rate, part, California, For file we will. more we've to large to shows When update. the point. no indication that done ability in

a an Tuesday. They've I they've got of think election rate on seen you've individual companies' couple probably approved programs.

the rate And We for and we'll ones to environment. approved. appropriately forward have watch we continue continue are to once the there move file

bunch you've I'm announced and in a interested I That's moves of the divestiture course, second my guess potential the particularly and, of question, business reciprocal. of preferred the of strategically helpful. establishment

how on, So should annual that making Board obviously, but investors looking share them we and on at management's could a to us you've you on not deploy important you going establish announced? whatever you're how quarterly as about with going the moves basis as strategies some you're that's guideposts maybe thinking and and everything be these

you're I'll outlined a I of the a I'll guidelines, of review more We're that. but those a strategic of tag bit. process this ratios PI through a go then will personal pieces and We insurance. And of team enhancements. is that think this on process. start with but couple thought add couple this the Sure. lines we'll the I on little most Jim Jim the a other still and in We've industry has seeing this understand a Maybe start top think with seeing this a climb our environment drop, that challenging challenging combined P&C environment lot for seen to that of make folks personal at point. to

We have partner. challenging need do on how our terms a that. a in sense time are to view of might looking how impact work business that will that's I imagine we to little quarters We're to highlight going at now, than every the own a what think will complete option us than or point likely we're have to I'd that through on you for take a just don't that. what that through whatever optionality. space and of and view of there. can this we doing. make couple to more another that going to But with for a point longer resolve environment everybody we'll in it's of It take to have

reciprocal that in of or enable able lowest one the a capital remainder things but start employees. customers that's elongate that from us structure would effectively standpoint, really has well an are can it's we way, stronger, in company that looking the advantages advantages tax as Greg, making our at of look enables the us ball, of customer being day-in, the stable, us pricing that to markets, day-out lower perspective. positive competitive highlight good principal-based again, the the model, are for you charges, can we pricing gives like company the would impacts advantage, policyholder, there. that us it's that benefits us that kind grow nature I'd of ways further positive two over and stakeholders, provide from When reciprocal always that in then as for The or we that term you be further of the that longer from for are with the start some of a We're the and stockholders there see from notable that quality have, where model, it, ourselves perspective well some pricing inside makes be also as advance of for essentially we stockholders. more them to perspective the That to our potential very the for terms from a help as some in is think the standpoint, something that today's benefits elements perspective. further model accelerated of things provide. a of that that several And volatility a we products stronger I to inside with removing that that

continue And so that stockholders. and and for a for move working We've for this our while, these excited to this been benefits both unlock our to in direction. on is our that customers and path on we're

reciprocal of sounds really [ph] the interesting. copy last The strategy

you're reciprocal the just of perspective, capital have to it at -- between movements the -- Jim, the time. as existing a have guess Are capital over sequencing exchange capital understand they trying to like establish the same entities? to your it I'm subsidiaries the you capital from going I to to sounds going get move from Just to

Yes.

of that benefit becomes It But in the over with from benefits. then to one perspective. sufficient. start reasons then years as five a other This and note, that takes Again, it self those repayable there appreciate capital right, provide customers. meaningful fully become comes and the fruition. of will will capital. our future note in obviously we'll you And five organization whole will go create time. capital, capital a forward to it surplus But reciprocal Or the very seven obviously surplus So return fully to for itself if seven is in as that as the a to continue return the our to terms to endeavors about meaningful the the take will capital is years that right of to the to ongoing come grow there is to option business. we'll

things, going those I of And effectively, how to we're that's big think, both So are positives. start.

for Thanks Got it. sense. the Makes answers.

you. Thank

Piper Our from comes today go Please from Newsome next question ahead. Paul Sandler.

follow that starting Good for? from new transfer policy, or and I licenses would have? would start then Is of the here that the happens evening. idea. on be reciprocal you transferring with idea own of business is for bit work letting the --? sort and you call. essentially filings -- that how the there would currently some a independent sort be little it Thanks that process guess, Would would theoretically simply up Is the and it fresh A book and reciprocal its what whatever mechanically, reciprocal, that's

I'm I question. you. done. you to I didn't sorry. interrupt were Good thought mean

I'm Thank done. you.

Good entity. already. into It question. we're many do we we'll our using entities will with licenses that cases writing new and write entity start state in will doing a we the in old And will the started is took we X business new all stop products business entity. we write we and create the new new mirror filings. fresh be business If would fresh and and in fresh What it, Okay.

own the over Jim it fill it it up. then started And it part capital with of we'll or capitalized. surplus takes note premium and time. underwriting profit And you the As as the it's generating that mentioned, policy contributions to surplus get makes, its a the then are

entity see close nominees, entities, down shift because do happen again strategy would grows, how they the written same the and the to on new that's the process. inside in will And new legal you'll it over. own capital. book and takes naturally products, it will gradually it of winds has similar a it we other and business open Very the that change business book, because new new an a what different here gets It's sometimes as thing program where part why bit time. So in up stop this its company build a little organization, one of to transfers old do

sense. for That commercial this for The wouldn't if for business, is just specialty the the wouldn't that reciprocal, makes as is business it be well, the it be separate? preferred, or

good it's P&C to question. time, Paul, At underwritings be for the lines we as intended personal this go forward.

go So it we've there's that got side. write it then on time, produce commercial continue But our review K, also that PPA little business, to currently in so PI, the what of point would about It very to it the included go and we the bit go benefit, on think would that benefit. This now, if will, or underwritings. a this, this review. a in at to essentially we it's outcome through you through there's for direction a intent of direction. in not PPA the clear be cloudy, Or the complete It's current that. that. where at stage PPA benefits on benefit whether the more on is right But can intent that writings what to through if head again, provide it will were for we depending in. strategic here. but the depending be, the to to that potential is this it has for our entities But The it's is

complete Paul, to PPA XXX% agree to be any conducted be working clear, opportunity going in of start strategic I PI we'll that and be specialty we're to we with a before direction. but to And move Jim, with there. the review

a what great. cash question. relatedly, to Did know trapped to captive, that's captive? or the I purely essentially Life captive, in year-to-date? then something I do cash of Life able able of that that I'll kind want of guess you're flow reserves hold with or it the one And Okay, flow So little ask to you transfer? negativity, guess were And that holding to part the statutory was I the process tie less the capital? operating less is as capital a

correctly, looking all. answer. consolidated Paul, first don't a Big this. on for, you're please And understand I I if if XXX% picture, ask to going to what I'm of follow get it's up

with the we of entity through reserves Second all, dividend that extraordinary holding Holdco the the was when received of the or today. to essentially an from that we transferring essentially effectively went that, then went United,

at. you're about of But freedom. of our structure reinsurance same terms we looks the basis. where you're in it's for In ongoing terms that basis, what terms business on does. on have same what to of a ability kind going And if versus is in of our statutory going way capital the withheld obviously an GAAP other elements, essentially, uses trapped to and rest release like, see capital act then in you're it's guess, of thinking done a a funds I that and capital the This

happy hopefully to there, would but through them on. talk that you were further I you've got points touch if inside hit questions So hoping the any I on

of is is got there's the get like there? think insurance actually it. It's how what I versus I No, out difference pulled if the question a in captive subsidiary, the much just capital

million about inside of still capital $XXX that's there. that's There's entity the

will through, that. that we're ratios to just in or there. now, than you'll run kind saw should out the Holdco. much the benefits come million you the right entities expect that natural, highlighting of very where As from past. the position just -- Life work strength higher go overall But and are at the an really as or us so next to be you we over see the Obviously, run we've that at so the similar we're go continue to another year forward, would XXX And

Thank you. the I always help. appreciate

comes Meredith Brian from today question next UBS. from Our

open. line Your is now

Hi. A for Good them here you. couple of evening.

model First, operating the just on here. enhancements

correctly. understand just this want I I make So to sure

way see over looked the And to ratio, we're next I to at the X.X about million by X.X X in years, your rate, point XX X a kind expense your expense that to optimization bit [ph] run million Is real if LAE going ratio about decline to So little it to I theory XX a than of more? think on couple points. also your point that's of think estate rate.

it think I way. you're the Brian, right thinking about

what again but there, at is would answer. yes, that we're today, just directional sizes of Now right different be extrapolated the if to you where

there And question, you obviously, of as book reason excluding are adequacy start on put a because you've your filed sequential the with as see different lot what second that's a you've some you improvements, rate to today? rate as curious, Excellent. think Where asking respect increases is could is, far maybe California, now through at far. then we I'm And so of a right of to business point animal? just which obviously

Hi. Duane. I'd we basis Yes, should we're as -- think Joe adequate good say largely rate is we're and there. looking and we need continue regular outside at mentioned, rate. I a to on indications that California, This question. We're we'll of address

you. Got

So California? position are of perhaps in you a outside to start grow again to

trying words here. be to We're careful with our

So I'm it inflationary around. a going that adequate. about We to was be significant We it. believe there's environment still really believe blunt

don't bit more up sure of following We want does back So with moment We we'll it. and get make again. for rate be little in. it, modestly the geographies. want that inflation what outside earn behind see see we to out on want because in to that to cautious we're the to those remain front a I want of behind rate

the when we'll a So step we little tempered gas. on be

that relative in to your would piece others. add I position the only that is marketplace the other And it's

grow. how or you in in we we And will dictate so are ability that on sometimes the our differently? find marketplace also move So moving tandem, to depending

not everybody person If who's inadequate. not we're we [indiscernible] else choose our growing we than competitive. filter Customers higher might It's not be. we an be can Right. underwriting the just might because because as earlier, prices moved still are

Got you. I'm quick from And Makes just a last then some in happened Hurricane sense. Florida know just things I question, regulatory perspective. curious Ian, post

of far I Does outlook in or with they've right use that all kind them as growing of state are One your at that respect that believe change Florida as to where stuff and file. in that suspended of doing is now state? you

continue how regulatory what very of as change, been through the A place been doing. go what to then of in frontend active to want we'll of they of And terms from that's in a what they're has the states the accordingly. that file, terms use, using Florida may states They -- do Again, I to you of And we've get be last on changing some time. official of how this is the here an rate function? an we trying at one the to that position. abide continue right those however process we where category in us we then last rules Brian, do. we'll they're approval they as uncompetitive. And in, if sort of suggest price it. find And don't times they leave function think rules changing other the we'll lot doesn't in my we're that clarify have describe thought, comment some in to there's have states appear file my to Not

else adequate. We I think rate what think on to was a gotten be going market, there. to we've in we've of to ourselves is you rate. generally point the Duane taken what's got responsive happening But lot

there. other and is customer not to seeing when the activity, activity, to moving strong you're our competitive that we capability just the same same You're I advantage, needs. serve confident it's still expense activity, the grow a and extract that attractive shopping spot. in And we're time profile think have think an I -- we'll same very ability be seeing the

you. Great. Thank

from from Carletti JMP. next Our comes question Matt

Your the dropped line Looks is now there. question like open.

Gary next & our So is Please Dowling go ahead. from Partners. Ransom question from

evening. the surplus reciprocal couple to like in my more. it, you be you describing The sounds on way answered. a I put of have been questions it But lot a note. seem have Good A Yes.

You write put some new you surplus business. If note. things go well, another in

You trying seven what write understand I'm that to exactly self back transition funding five it's into the some you point? it, point? business. you by and more be consolidated continues because you at more at process and to sufficient that are already gotten at you over this you notes Are sufficient That years. can or put you've when self that's surplus saying point that don't to all mean the any that have

question. good Yes,

self the surplus back, all would notes be You you may not but have sufficient. of

other reinsurance new or time, course. those journey. come other putting to or in is would kind point elements earnings look about XX-year in to out sufficient need or of be the something of an And writing capital like that would self extent. that that or at mortgage in would more to entity necessarily itself perspective you wouldn't right, along it's it's that are extended elements You term -- building And Think in come normal it that making And from for that The any in at that up. at. point. probably a that it's note, note business

Right.

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the I model is think good Erie to a model So reference.

happens think versus move more non-standard specialty or what benefits. that those life what entire necessarily see, this it faster. becomes on business standard a think is for maybe temper, I highlight would and to I quite challenge preferred you I actually or as and isn't longer companies takes recover our to why it maybe Because policy actually as long the right, would just of

for standard more was might other seven. that favorable preferred elements got more have someone might and there's you benefits XX period modeling be is what think XX-year it's a better actually and the our it, before our like XXX% actually to difference more suggest of we I five consolidation like didn't for to would us, and it kind least I be if to that us. versus so you or that And at And that's

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yes. is That correct,

of so it, through. come And obviously component it that benefit creates tax that

you about about just think but might that it. might think it might maybe you it as have, think XX% you on of of you margin being of depends the small, large. If as how thinking It you're that

the setting in? Right. you And what then domicile reciprocal up are

So final for we're we kind us. that would haven't be the the a we're I that. though going there couple deep There's where and of details on say to announced it's and working two optimal that or location fairly three as

details there'll And more so be shortly.

yet. finalized It's not actually

that's right. it. All guess I yes, And

I very think Thank much. understand. I you

Thanks a Gary. lot,

from final Our question Andrew comes from Suisse. Kligerman Credit

Your line open. now is

Thanks want fill good lot. answers. lot just to a Good evening. bunch a a out of I of blanks,

think the looking impact. just I less written I and little like looks there it at Slide said get So written feel you're you you like than you that said impact, think. XX And a you'll we're X% overall pretty earlier --

I So far guess that everywhere pretty in illustrates California, that you're along correct?

seeing not you're you help Can where with what on time you seeing, one I'm the Andrew. more are --?

reflects fourth five that multiplying from Yes, quarter. your you XX% -- need times right? so overall the little And to it, they're lot It with than like XX.X hence the comment going less impact or a in more. seem a XX.X, doesn't on impact X% written

the that group book. is the or that's another what and XX.X impact rate read I the renew you're overall in, that's written so average I'm X on impact as of effective to not that point the the driving. working being would column of overall that's policies another it's renewed impact What think just in is level XX.X the the rate weighted sure seeing I at Yes, and quarter, saying

pointed you terms in I the it's really that earnings, it will look working of because the what points ratio. on year. what's you when is that's be book, think earned see how at the overall loss we've about the the rate quarter, to that, next third is period to want the this I earned rate through you look by in to of rate impacting current the XX out taken come time out X.X The

it a -- California, because to think X.X level what been on about the had couple works X.X the for have slide, this time you believe And price the over or it the other saying watch, you the next up time state And adequacy of adequate than in be that -- XX a and what adequacy will this we're we be we'd was becomes say want earned months, So that by no there, that rate see level analysis. next there means rate if number that's needed. year. we impacts working When adequate or is will were that XX we're we rates we where at the we're about to won't least through. which [indiscernible] I then it states about a all expected inflation and

that Now that's got rises because to again, we're the inadequate course. ordinary we watch is, now then again. what up inflation if normal, And

it If and be X points you're it to X you expected was XX, light.

rate We've California in X adequate expect some of adequate baked this say us that X, our views you got in and everywhere those and everywhere be pricing. business. XX roughly into it's to we're helping what's you're points If rate That's it heavy. --

the chart. You off it pull can't quite

there's going that non-rate rate And in was like I Is in entire about or would I at, to it throw way getting X% you California, probably look I ex guess doesn't forward. to the Right. just quarter? looking much your just much taken book, I probably not incrementally next think guess it X% more at that fair across be actions. you're that than

is Jim. way. at So this look would it not I that

filing actual on rate Our is page. activity the

at will X%. average at weighted that we're of of think rate highlighting I impacted that we're about the XX% filed premium be

about think its that's look say of about is XX.X there you're we're essentially been at. working the outperformed in you generally way into to elements has or right that the percentage So side when quarter, to book tells I rate one book component, thinking about we're or doing. others, kind these is looking right, over priced against the doing to that's of how kind against is what telling the at that quarters, written, you right, it telling next numbers. what think that's it, you you're the I like those pricing that that it, the there. what this had of if [indiscernible] is We've and the you I When think two think this it And

And So do a for tables what the should planning from between you we're think is we're to one if we're the doing I express. about trying looking just from to perspective. rate think right careful you're at we what be what perspective filing a to

of here. right the The not side of side left in rate this the rate all our chart on line prior time adequacy on dotted chart incremental the left period. changes. changes side the are represented The is And cumulative the to the -- the impact of of comments is card

our thoughtfully because is So the this are could other than we're that of we that in are make saying roughly we is on rate believe in X% all rate we and California you taking rate take adequate away in states, planning want this. that to sure and we this XX% from conservatively if behind our book, ahead indications what also not now, of on

taking in slow and to were were down rate you thinking. it's we as the not XX But pace. slowing previous Now so weighted as the XX two average quarters, we're

sense. of That makes Right. a lot

that. X maybe you'll it sense. times makes -- after do of But And then more plenty XX maybe and So

to you one I'm Andrew. second, for interrupt Again, going

right, whole might the You book. XX X might point times be be X on the

looking on X% to X, important not indicative -- we're I think going other more about X%. might impact would rate into what we're what that be increase, and a you're for would a geographies. be when X%, states, The book those get what's about we in that the be trying thinking still to is get a whole of

to it converting but miss want to might don't where be other folks I we're we're going. on math [indiscernible] Your direction saying appropriate, a

page. was why we're end reason multiplied that's coming like the And the XX.X. feels of of just same think there. sort it the you're I was only I line I that The towards on But the Yes. telling

to need So no --

to of adequacy taken that took we I XX that last by this did that made year, were we questions we're benefits have time is And the of you're points trying Andrew, already next was rate nothing think what communicate, earned we or in all we close last I we rate comment of book, are comment through before that push else, to California, earned actions if feel rate in. was coming. like to that this outside going Yes, seeing

Now bank, coming we top -- that's of do will -- that, for passage are but that's the it's it of out. more in going to time, come on just the

time, business clear at think and experience the over with the Absolutely challenged highly up sale, in and this preferred loss significant. And how shifting as we are in so to potential a capital that the maybe that there then it being about preferred to point business? is thinking without the on much tied value, How value? you or potential business that obviously? you being get to could cost exit you premium too would may values And that about anticipate be specific a

there. interested values. That right potential if and good this go a premium, before on challenge was not a that In they we're to little describe parties. the pressure to pressure, a is I'm would that the to a be environment. made couple difficult is And us an bit. putting you is of downward that remind through loss there talked sure You which us highlighted one, conflict yes, it's And a upward a there we've forum going for process. points

environment. way of is position work do through your what But own current in think evaluation Let's you market can our you that. the business' the

enough. fair Okay,

capital, The that it's million. in that question secondary you and that XXX [ph], see the to between reason I the various And could colleagues highlight XXX from but range terms million things this of however the work is against on you're business. nature. the pledged underwritings, dependent that's that's to just it, capital mix it's through business, going -- essentially of that's But of obviously

looking And the think able I to captive each I down the by as these businesses? $XXX about of two the entities? at them where move helpful. I the very think they're as that's ability? are now line would are see out coming different. with then million, the as reciprocal, Okay, agencies where extract specific how about you're rating these on know Where agencies claims rated we you And paying you

rated highlight, inside just business. would an A I we're the So

have terms ratio. in higher to that thinking stronger, expect this, of RBC continue. we're transaction, When We about right? We you're overall a the

have as a be will this. of company leveraged greater we We flexibility because less and

very All priorities what from positive, a capital of highlighting are that those is for strong first to maintain our And our things profile. is uses very right, perspective. credit risk we're and that notice

so And ratings. changes yes, that the way positive or -- of I the any of elements would come kind and tell these would through think business managing would are of any foresee change in I other we and all terms you, don't I we're

very Terrific. you much. Thank

Thank you.

I There will to back Joe no closing at now remarks. time. further you hand for are Lacher over questions this

of our of your we the quarters good joining on some forward to questions. to start the you mentioned next refer for for again the to Thank to you we're couple going labors what where today, organization. ago, you about a profitability progress we underlying speaking to excited as brought And Take we're everybody I headed as time call home fruits to and projects Look on see spend restoring making interest quarter. your think We're on improvement of and us those being care. online. and

Kemper's concludes quarter call. earnings This conference third

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