Matt Carletti

Matt Carletti with Citizens JMP Securities inquired about the observed frequency and severity of claims, specifically regarding the 25 claims exceeding $1 million in 2025. He asked if there was a particular timing for these claims and if any similarities existed across injury types or areas of the book. He also sought more color on the broad-based growth, asking about specific successful geographies or exposure areas, and finally, asked for details on the favorable development in the quarter, including contributing accident years and drivers.

Answer

Janelle Frost, President and CEO of AMERISAFE, explained that overall reported claims frequency increased by 7.8%, aligning with 10.2% policy growth. She noted that while there were 25 claims over $1 million (a 'frequency of severity'), their average severity was lower than the 18 claims in 2024, and they mirrored the overall book in terms of cause of loss and industry. Regarding growth, Ms. Frost and Vincent J. Gagliano, EVP and Chief Risk Officer, stated it was broad-based across states and classes, with no significant shift in the top 10 states or primary industry mix (construction, trucking, logging, agriculture). They highlighted the emergence of a 'services' category in the 10-K due to growth and increased success in agriculture. For favorable development, Ms. Frost attributed it to closing and settling claims, with contributions from accident years 2022 (~$0.5 million), 2021 (~$1 million), and 2020 and prior (~$6.1 million).

Matt Carletti inquired about the observed frequency and severity of claims, specifically asking if the increase in large claims was lumpy or spread throughout the year, and if there were any commonalities in cause of loss or industry types among the 25 claims exceeding $1 million. He also asked for more details on the drivers of AMERISAFE's broad-based growth across geographies and exposure areas, and sought color on the favorable development in the quarter, including specific accident years and the underlying drivers like claims closures.

Answer

Janelle Frost, President and CEO of AMERISAFE, explained that overall claim frequency increased by 7.8% in 2025, aligning with policy growth of 10.2%. She characterized the 25 claims over $1 million as a "frequency of severity," noting their average severity was lower than the 18 claims in 2024, and that their causes and industry groups mirrored the overall book. Regarding growth, Ms. Frost stated it was broad-based with no significant shift in industry mix or top 10 states. Vincent J. Gagliano, EVP and Chief Risk Officer, added that "services" would be a new reporting category in the 10-K due to growth, and agriculture also saw increased success. For favorable development, Ms. Frost confirmed it was driven by closing and settling claims, with contributions from accident years 2022 ($0.5 million), 2021 ($1 million), and 2020 and prior ($6.1 million).

Matt Carletti asked about the strategic focus for new underwriting partnerships (lines of business, geographies, or bespoke products) and the factors influencing these decisions. He also inquired about the relationship between net earned and net written premiums, specifically the impact of longer-earning credit products and the expected sustainability of the Q1 guidance.

Answer

Group CEO Dan Burrows explained that partnership decisions are based on risk-reward dynamics, seeking attractive margins and diversification across various factors, while avoiding unattractive lines like casualty. Group Managing Director Jonny Strickle emphasized a high bar for new partners, aiming for a small number of meaningful, long-term collaborations. Group CFO Allan Decleir attributed the delta between earned and written premiums to improved loss experience on California wildfires, the strategic exit from aviation business, and the growing mix of longer-earning asset-backed finance and portfolio credit products, confirming the Q1 guidance reflects this new business mix.

Matt Carletti from Citizens JMP also asked about the relationship between net earned and net written premiums in Fidelis Insurance Group's insurance segment, particularly the impact of longer earning patterns from credit-type products and whether the lower Q1 2026 guidance for this ratio is expected to persist.

Answer

Group CFO Allan Decleir and Group CEO Dan Burrows clarified that the delta is influenced by improved loss experience on California wildfires reducing reinstatement premiums, a strategic reduction in aviation business, and a shift in business mix towards longer-earning asset-backed finance and portfolio credit. They confirmed the Q1 guidance reflects this new expected business mix.

Matt Carletti requested clarification on the starting amount of third-party Managed Premium at the end of Q4 2025, given the total Managed Premium of $1.39 billion, and asked for a reconfirmation of the pre-tax income guidance for Q1 2026.

Answer

CFO Suela Bolku stated that the third-party Managed Premium was modest at the end of Q4 but is expected to become material by the end of Q1 2026. CEO Paresh Patel emphasized that third-party revenue was zero at the end of Q3, nominal at Q4, and projected to be approximately $100 million in Q1, demonstrating rapid growth. Bolku then clarified the pre-tax income guidance for Q1 2026 as $23 million to $26 million.

Matt Carletti sought clarification on the starting point for third-party Managed Premium at the end of Q4 2025, given the total Managed Premium of $1.39 billion and the Q1 2026 guidance. He also asked for confirmation of the Q1 2026 pre-tax net income guidance.

Answer

Suela Bolku, CFO, stated that the third-party premium contribution in Q4 was modest but is expected to become material by the end of Q1 2026. Paresh Patel, Chairman and CEO, emphasized that third-party revenue was zero at the end of Q3, nominal in Q4, and is projected to reach approximately $100 million in Q1, illustrating rapid growth. Bolku confirmed the Q1 2026 pre-tax net income guidance to be between $23 million and $26 million.

Matt Carletti (question asked by David) from Citizens sought more color on the current pipeline, specifically whether it remains dominated by Florida-based startups or if there's greater diversification in client type and geography.

Answer

Paresh Patel (Chairman and CEO, Exzeo Group) confirmed substantial pipeline growth in both prospect numbers and channel diversity (reinsurance brokers, investment bankers, direct contacts). He highlighted significant geographical diversification, with prospects originating from both Florida and non-Florida regions, which he found highly encouraging.

Matt Carletti asked for a breakdown of Palomar's casualty book by segment (excess/primary GL, professional lines) and the proportion written directly versus through programs or delegated authority arrangements.

Answer

Mac Armstrong (CEO) explained that the casualty book is predominantly E&S casualty (niche GL), with some professional lines (E&O, healthcare liability), generally avoiding 'wheels business.' He highlighted conservative reserving (80% IBNR) and limits (average net $1 million). He also noted that a little over half of the business is program-based, with Palomar leaders involved in underwriting and claims, leveraging reinsurance for validation.

Matt Carletti requested a breakdown of the casualty book's composition, specifically the proportion of excess and primary general liability versus professional lines exposures, and how much of this business is directly written by Palomar versus through program or delegated authority arrangements.

Answer

Mac Armstrong, Chairman and Chief Executive Officer, stated that the predominance of the casualty book is E&S general liability, with some professional lines like E&O and healthcare liability. He highlighted conservative reserving (80% IBNR), low average net limits (under $1 million), and a focus on buffer layers to avoid social inflation. He also noted that about half of the programs involve leaders in underwriting, claims administration, and adjudication, leveraging both internal and program business for market access.

Matt Carletti asked about the significant shift of approximately 1 million households from the 'don't access' to 'currently access' bucket on Slide 13, seeking clarification on the drivers behind this change. He also inquired about the long-term target for the net interest spread in the retirement segment, recalling a historical target of 220-230 basis points.

Answer

CEO Marita Zuraitis attributed the increase in educator households to multidimensional efforts, including investments in marketing, digital experience, and distribution, as well as strategic partnerships and brand awareness initiatives. She noted strong sales momentum across all business lines and the impact of new strategies like engaging homeschoolers and university alumni. CFO Ryan Greenier confirmed the 200 basis point spread target for the fixed annuity block, explaining that 2025 performance was impacted by commercial mortgage loan underperformance, while overall retirement profitability remains on target.

Matt Carletti asked about the significant shift in Horace Mann's K-12 household access, specifically the increase in households from 'don't access' to 'currently access'. He also inquired about the long-term target for net interest spread in the retirement segment, particularly for the fixed annuity block.

Answer

Marita Zuraitis, President and CEO, explained the increase in educator households was multidimensional, driven by investments in marketing, digital, and distribution, leading to strong sales momentum across all businesses. She also mentioned strategic partnerships and efforts with homeschoolers and university alumni. Ryan Greenier, Executive Vice President and CFO, confirmed the 200 basis point spread target for the fixed annuity block, noting 2025 was below target due to commercial mortgage loan underperformance, while overall retirement profitability remained on target.

Matt Carletti from Citizens JMP asked for clarification on the sustainable run rate for corporate and other expenses, questioning if the recent ~$25 million quarterly figure included any one-time IPO-related costs.

Answer

Group CFO Mark Pickering confirmed that ~$25 million is an appropriate quarterly run rate for corporate and other expenses going forward. He clarified that all IPO-related expenses are accounted for separately in the non-operating expense line.

Matt Carletti from Citizens JMP asked for clarification on the corporate and other expense line, questioning if the recent $25 million figure is a sustainable run rate.

Answer

Mark Pickering, Group CFO & Treasurer, confirmed that the $25 million quarterly figure for corporate and other expenses is an appropriate run rate to use going forward. He also specified that any one-time IPO-related expenses are recorded in the non-operating expense line, not in this figure.

Matt Carletti from Citizens JMP asked for clarification on the 'Corporate and other expenses' line, questioning if the recent figure of approximately $25 million per quarter is a sustainable run rate or if it includes one-time IPO-related costs.

Answer

Mark Pickering, Group CFO & Treasurer, confirmed that the $25 million figure for 'Corporate and other expenses' is an appropriate run rate going forward. He specified that any expenses related to the IPO are reported separately in the non-operating expense line.

Matt Carletti of Citizens JMP asked for clarification on the corporate and other expense line, questioning if the recent level of approximately $25 million per quarter is a sustainable run rate or if it includes one-time IPO-related costs.

Answer

Group CFO Mark Pickering confirmed that the $25 million figure is an appropriate run rate for corporate and other expenses going forward. He clarified that any expenses related to the IPO are accounted for separately in the non-operating expense line.

Matt Carletti of Citizens Capital Markets inquired about the current competitive landscape in Florida, the company's outlook for Citizens depopulation for the remainder of the year, and the rationale for pursuing an IPO for Exeo instead of a spin-off.

Answer

COO Karin Coleman described the Florida market as healthy but increasingly competitive, noting HCI is well-positioned due to its multiple underwriters, strong capital, and technology. She also confirmed that three HCI carriers were approved for a 25,000 policy depopulation each in October. CFO Mark Harmsworth stated he could not comment on the specifics of the Exeo IPO strategy due to the confidential S-1 filing but affirmed the move is to unlock value.

Matt Carletti of Citizens Capital Markets inquired about the current market conditions and competitive landscape in Florida, HCI's appetite for the upcoming October Citizens depopulation, and the strategic reasoning behind pursuing an IPO for Exeo instead of a spin-off.

Answer

Karin Coleman, COO, described the Florida market as healthy but increasingly competitive, noting HCI is well-positioned with multiple underwriters and advanced technology. She confirmed that three HCI carriers were approved for 25,000 policies each in the October depopulation. Mark Harmsworth, CFO, addressed the Exeo question, stating that while separating Exeo is a key focus to unlock value, he could not comment on the specifics of the IPO strategy versus other options due to regulatory restrictions.

Matt Carletti from Citizens Capital Markets asked for guidance on how to think about Hamilton's effective tax rate going forward.

Answer

CFO Craig Howie explained that Hamilton maintains a strategic competitive advantage regarding taxes. He stated that the company has a five-year deferral on the global minimum tax, which will not apply until 2030. As a result, Hamilton's effective tax rate is expected to remain in the low single digits for the foreseeable future.

Matt Carletti of Citizens JMP requested a qualitative update on the progress and outlook for Bowhead's flow underwriting platform, Baleen, beyond the reported premium figures.

Answer

Founder, President, CEO & Director Stephen Sills described the outlook for Baleen as 'very positive.' He acknowledged that premium volume is not yet at expected levels but stressed that the core technology is fully developed and functional, enabling automated quoting and binding with minimal human intervention. The current focus is on increasing submission volume to scale the business, and he expressed confidence in its future growth path.

Matt Carletti from Citizens JMP asked for details about the new aviation unit that Skyward launched since the previous quarter, specifically inquiring about the types of risks it will target.

Answer

CEO Andrew Robinson explained that the new unit was formed by acquiring a program administrator they had an existing relationship with. The focus is on a niche, underserved segment of the market: the small, non-commercial end, such as personal aircraft. He noted they acquired a book of around $20 million and see a path to grow it to approximately $50 million while maintaining margins.

Matt Carletti of Citizens JMP asked for more detail on the cumulative trauma (CT) claims, specifically if there were any discernible trends by account size, industry class, or geography beyond the previously mentioned Northward spread in California. He also inquired about the upcoming Q3 reserve study, asking if its methodology would differ from typical studies or if it was simply a matter of increased frequency to monitor the developing situation.

Answer

President & CEO Katherine Antonello responded that beyond the geographic spread from Southern California to the Bay Area and Sacramento, the company has not observed any other specific trends in CT claims related to class code or policy size. Regarding the Q3 reserve study, she clarified that the general approach to reserving has not changed, but it will be a similar, full study to the one conducted in Q2, providing another data point to reflect on the rapidly changing environment.

Matt Carletti of Citizens JMP asked for more detail on the cumulative trauma (CT) claims, specifically if there were any discernible trends by account size, industry, or geography, and questioned the nature of the additional reserve study planned for Q3.

Answer

President & CEO Katherine Antonello responded that beyond the geographic spread of CT claims from the Los Angeles area to the Bay Area and Sacramento, the company has not observed any other specific trends by class code or policy size. She clarified that the planned Q3 reserve study will follow a similar approach to the Q2 study, serving as another data point to monitor the rapidly developing situation.

Matt Carletti from Citizens JMP asked for a deeper analysis of the casualty market, particularly in transportation and general casualty, and questioned how much longer sizable rate increases would be needed to offset loss cost trends.

Answer

President and CEO Craig Kliethermes stated that for transportation, the company assumes double-digit loss cost inflation, which necessitates the significant rate increases they are pursuing, despite MGA competition. He emphasized a willingness to walk away from business if rate adequacy isn't met. COO Jen Klobnak added that competitive pressure is most intense on large accounts, causing a shift in RLI's book towards smaller accounts, but the focus remains on rate and risk selection to stay ahead of trends.

Matt Carletti from Citizens JMP asked for an assessment of the casualty market, particularly for transportation and general casualty, questioning how much longer significant rate increases will be needed to offset loss cost trends.

Answer

President and CEO Craig Kliethermes stated that for transportation, underwriters assume double-digit loss cost inflation and are achieving rate increases of 12-14% to match, despite MGA competition. He stressed RLI's focus on disciplined risk selection. COO Jen Klobnak added that competitive pressure is highest on large accounts, leading to a mix shift toward smaller accounts, but the core strategy of rate adequacy and risk selection remains unchanged to stay ahead of trends.

Matt Carletti from Citi asked for an in-depth perspective on the casualty market, particularly for transportation and general casualty, inquiring about the current stage of the pricing cycle and the need for continued rate increases to offset loss cost trends.

Answer

President and CEO Craig Kliethermes stated that for transportation, the company assumes double-digit loss cost inflation, which necessitates the significant rate increases they are pursuing (14% in Q2). He noted that underwriters are willing to walk away from business if rate needs aren't met, emphasizing risk selection. COO Jen Klobnak added that competitive pressure is most intense on large accounts, leading to a shift in their book's composition towards smaller accounts.