Tommy McJoynt

Tommy McJoynt inquired about a $10 million "other investments" line item on the statement of cash flows, seeking clarification on its nature and whether it was M&A-related and accretive. He also asked about TWFG's M&A pipeline expectations for 2026 compared to 2025.

Answer

Gordy Bunch, CEO, Chairman, and Director, clarified that the $10 million investment was capital deployed into TWFG's Premium Finance operations, replacing credit facilities to achieve a higher yield (above 7%), making it "highly accretive." Regarding M&A, Mr. Bunch anticipates TWFG will exceed its 2025 acquisition pace in 2026, executing earlier in the cycle.

Tommy McJoynt questioned the future trajectory of EBITDA margins, asking if continued year-over-year expansion is expected and if a 25% full-year margin is feasible in the coming years. He also asked for quantification of the one-time gain on sale that was mentioned as a contributor to Q2 margin uplift.

Answer

CEO Gordy Bunch described a 25% full-year EBITDA margin as 'feasible' in the next couple of years but not currently projected, stating it would depend on the scale of future high-margin acquisitions and the success of efficiency initiatives involving AI and offshore operations. CFO Janice Zwinggi quantified the one-time gain on a book of business sale at approximately $600,000. She also noted that a year-over-year increase in interest income of over $1 million also boosted profitability.

Speaking on behalf of Tommy McJoynt, an analyst asked for quantification of the organic growth headwind from an MGA program's commission structure change and for clarification on the components and run rate of the 'Other Income' line.

Answer

CFO Janice Zwinggi quantified the MGA program headwind at a $1 million decline in fee income for the quarter. Executive Richard Bunch added that this was a one-time impact from a new 5-year agreement and is not expected to recur in 2025. Regarding 'Other Income,' Janice Zwinggi stated that 95% is investment income, which has increased due to IPO proceeds and is expected to remain elevated.

Tommy McJoynt with KBW sought clarification on the volatility in American Integrity's underlying loss ratio due to its quota share reinsurance structure, how to model this for future quarters, and the drivers behind the unfavorable prior year net reserve development in Q3, also asking for expectations on the gross loss ratio trend.

Answer

Ben Lurie, CFO, explained that the gross underlying loss rate for non-CAT losses was 17.4% year-to-date, aligning with expectations, and that the quota share structure leads to a higher net underlying loss ratio in periods without catastrophes. He confirmed that with expected CAT losses and a planned reduction in quota share, the underlying loss ratio should decrease year-over-year. Regarding reserves, Ben Lurie noted year-to-date unfavorable development of $1 million, considered immaterial. Jon Ritchie, President, clarified that favorable development in non-catastrophe underlying losses was offset by some unfavorable catastrophe development. Jon Ritchie also confirmed the 17.4% year-to-date gross non-CAT loss ratio was consistent with the prior nine-month period, with Ben Lurie projecting a modest increase of about one point over the next 12 months due to inflation and the Citizens' book impact.

Tommy McJoynt inquired about the volatility in American Integrity's underlying loss ratio, the structural features of its quota share reinsurance, and how to model individual quarters for this ratio next year. He also asked about the unfavorable prior year net reserve development in the third quarter compared to peers.

Answer

Ben Lurie, CFO of American Integrity Insurance Group, explained that gross underlying losses are 17.4% year-to-date, in line with expectations. He clarified that the quota share structure leads to a slightly higher underlying loss ratio in periods without catastrophes and lower in years with catastrophes. He confirmed that if baseline catastrophe losses are expected in Q3 2026, the underlying loss ratio should come down year-over-year, also influenced by an anticipated reduction in quota share. Regarding reserve development, Ben Lurie stated that year-to-date unfavorable development is about $1 million, considered immaterial and in line with expectations, with actuarial conclusions reviewed by Ernst & Young. Jon Ritchie, President, added that favorable development was seen on non-catastrophe underlying losses, partially offset by some unfavorable catastrophe development. Bob Ritchie, Founder and CEO, expressed satisfaction with forecasting and management. Jon Ritchie further confirmed that the gross non-cat loss ratio has been consistent around 17% for the last 18 months, attributing it to stable severity and a significant drop in frequency. Ben Lurie projected a slight increase of about one point in the gross loss ratio over the next 9-12 months due to inflation and Citizens' book impacts.

Tommy McJoynt of Keefe, Bruyette & Woods (KBW) asked about the potential benefits of geographic diversification on reinsurance costs, specifically from the Tri-County expansion and growth in other states. He also questioned the company's competitive moat in the new home construction market and requested a breakdown of policies in force between voluntary and Citizens takeout programs.

Answer

President Jon Ritchie explained that while expansion into the Tri-County area incrementally aids the PML and balances the portfolio, growth in other states like Georgia and South Carolina does not provide a material reinsurance benefit. Founder and CEO Bob Ritchie detailed the company's new home market moat, attributing it to deep relationships with builder agents, a tech-enabled platform with APIs, capitalizing on market shifts, and a strong internal focus. Jon Ritchie also clarified that of the policies in force, approximately 100,000 to 110,000 were from Citizens.

Tommy McJoynt from Keefe, Bruyette & Woods (KBW) inquired about the reinsurance cost benefits from geographic diversification, the company's competitive moat in the new home construction market, and the policy mix between voluntary and Citizens takeout policies.

Answer

President Jon Ritchie and Founder & CEO Bob Ritchie clarified that while Tri-County expansion beneficially diversifies the portfolio and PML, out-of-state growth is not expected to materially impact reinsurance costs. Bob Ritchie attributed their 30% market share in new homes to deep-seated relationships with builder agents, a tech-enabled platform with APIs, and capitalizing on market shifts. Jon Ritchie stated that of the 399,000 policies in force, approximately 100,000-110,000 were from Citizens.

Tommy McJoynt asked about the expected reinsurance cost impact of expanding into the Tri-County area and the outlook for the attritional loss ratio for the remainder of the year, considering factors like Citizens takeouts.

Answer

President Jon Ritchie explained that due to the company's current lack of concentration in the Tri-County region, the expansion is expected to be accretive to the reinsurance program through diversification. Founder & CEO Robert Ritchie added that the non-cat loss ratio is benefiting from substantially reduced claim frequency, which offsets inflation on the severity side. CFO Ben Lurie noted that current financial ratios are temporarily benefiting from Citizens takeouts, which artificially depress the ratios, and expects a reversion to more normalized levels over time.

Tommy McJoynt of Keefe, Bruyette & Woods (KBW) questioned the expected impact on reinsurance costs from expanding into the Tri-County area. He also asked for the outlook on attritional loss ratio trends for the remainder of the year, considering various factors.

Answer

President Jon Ritchie stated that because the company is under-concentrated in the Tri-County region, the expansion is expected to be accretive to the reinsurance program due to diversification. Regarding the loss ratio, Founder & CEO Robert Ritchie noted that reduced claim frequency is offsetting inflation. CFO Ben Lurie added that current ratios are temporarily depressed due to the accounting effects of Citizens takeouts and will normalize over time.

Tommy McJoynt inquired about the conditions or events that would lead Assured Guaranty to book a favorable reserve development for its Puerto Rico Electric Power Authority (PREPA) exposure, given recent positive developments.

Answer

Dominic Frederico, President and CEO, stated that a definitive deal is needed for recognition of value, citing past rescinded deals. He emphasized the company's preferred creditor position based on a recent appellate decision and its steadfast commitment to defending legal rights, drawing parallels to successful RMBS recoveries.

Tommy McJoynt from KBW asked about Assured Guaranty's pipeline for growing written premium into 2026, focusing on opportunities in increased infrastructure spending and structured credit. He also sought an update on the Puerto Rico PREPA exposure, specifically what developments would trigger a positive reserve adjustment for the company.

Answer

Rob Bailenson, Chief Operating Officer, and Dominic Frederico, President and Chief Executive Officer, highlighted strong opportunities across all financial guarantee lines, including significant investment in the U.S. public finance secondary market, growth in global structured finance through core lending portfolios, fund finance, and Australian infrastructure. They emphasized the shift to shorter-term, capital-recycling structured finance. Regarding PREPA, Dominic Frederico stated that a definitive deal is required for reserve recognition, citing past rescinded deals and Assured Guaranty's strong legal position and successful loss mitigation track record in other complex cases like RMBS.

Tommy McJoynt asked about the recent dismissal of several members of the Puerto Rico Oversight Board, its potential impact on restructuring timelines, the company's current holdings of Puerto Rico contingent value instruments (CVIs), and the potential correlation between strong economic activity and PREPA's ability to repay its debt.

Answer

President and CEO Dominic Frederico stated he was optimistic about the board changes, suggesting the previous board was already causing significant delays and that any change could be an improvement. He disclosed that Assured Guaranty holds approximately $117 million in CVIs, which have performed well. Regarding PREPA, Mr. Frederico expressed confidence in its ability to repay debt, noting that the situation is becoming more positive for reaching a consensual agreement.

Tommy McJoynt inquired about how to estimate partnership as a percentage of earned premium, given the provided figure for new writings.

Answer

Head of Investor Relations Matt LaMalva noted that partnership as a percentage of new writings was roughly flat this quarter due to strong growth in both channels, but is expected to increase long-term. CEO Alex Timm added that earned premium from partnerships would likely be higher due to larger policies and more vehicles per household in that channel.

Tommy McJoynt of Keefe, Bruyette & Woods inquired about the outlook for policies in force (PIF) growth, the impact of a competitive direct channel, whether the partnership channel is now large enough to offset a direct channel pullback, and the budget for sales and marketing spend for the remainder of the year.

Answer

Co-Founder and CEO Alex Timm noted modest PIF growth quarter-to-date in Q3, driven by the rapidly expanding partnership channel, which tripled new writings year-over-year. He stated that while the company will not chase a soft market in the direct channel, the partnership channel is expected to drive modest near-term growth and become a more sizable portion of the business over time. CFO Megan Binkley added that marketing spend will remain opportunistic and is expected to be slightly elevated compared to Q2, driven by R&D investments in new channels.

Tommy McJoynt (KBW) asked about the anticipated contribution of Citizens' takeouts to Slide Insurance's growth in 2026, and whether the current one-to-one net written premium to consolidated capital ratio is the optimal leverage target, especially with diversification into new states.

Answer

Bruce Lucas, Chairman and CEO of Slide Insurance Holdings Inc, indicated that while Citizens' takeouts still offer opportunities, the company's primary focus for 2026 will shift towards expanding voluntary distribution channels and products into new states. Lucas affirmed that the one-to-one net premium to consolidated capital ratio is a hallmark of stability, and Slide has the capacity to increase leverage and maintain conservative writing ratios due to its strong earnings profile.

Tommy McJoynt from KBW questioned whether Citizens takeouts would continue to be a significant growth driver for Slide into 2026, beyond the current quarter, and sought insight into the company's broader growth opportunities in other coastal markets. Tommy McJoynt also inquired about Slide's one-to-one net written premium to consolidated capital ratio, asking if this conservative leverage would be maintained or if diversification into new states might allow for higher premium leverage.

Answer

Chairman and CEO Bruce Lucas acknowledged ongoing opportunities with Citizens but emphasized a strategic shift towards expanding voluntary distribution channels and launching products in new states, leveraging Slide's strong balance sheet for growth outside Florida in 2026. Bruce Lucas described the one-to-one ratio as a unique hallmark of stability for a coastal specialty insurer. He confirmed that while conservative, Slide's strong earnings profile and ROEs would generate additional capital, enabling increased leverage for growth while maintaining conservative ratios.

Tommy McJoynt asked for context on the potential number of policies that could be assumed from the 175,000 approved Citizens takeouts and inquired about the company's organic growth efforts outside of Citizens, such as agent and channel expansion.

Answer

Founder & CEO Bruce Lucas explained that the ultimate Citizens assumption rate is variable, historically ranging from 30% to over 70%, but noted they remain bullish on the Q4 opportunity. For organic growth, Lucas highlighted the expansion of their agent network to over 5,000, the formation of national partnerships, and the successful scaling of their direct-to-consumer (DTC) channel.

Tommy McJoynt asked about the wide range in the full-year outlook, what factors would lead to the high end, and if the raised contingent commission guidance was offset by core revenue reductions. He also sought clarification on the 40% total written premium growth opportunity from the digital agent and the company's appetite for further share buybacks.

Answer

Mark Jones (CFO and COO) attributed the wide range to contingent commission variability, noting potential upside, and confirmed expected acceleration in core revenue for Q4. He explained the 40%+ growth from the digital agent is incremental, targeting new markets through partners with serviced mortgages. Regarding buybacks, Mark Jones highlighted strong cash generation and a conservative balance sheet, noting $36 million remaining on the authorization for strategic market action.

Tommy McJoynt asked about the factors that would lead Goosehead to the high end of its full-year outlook, especially considering the raised contingent commission guidance. He also sought clarification on the 40%+ total written premium growth opportunity from the digital agent, including its baseline and potential for cannibalization, and inquired about the company's appetite for further share buybacks versus digital agent investments.

Answer

Mark Jones (CFO and COO) attributed the wide range in the outlook to the variability of contingent commissions, noting potential upside given favorable loss ratios. He confirmed expected acceleration in core revenue for Q4. Regarding the digital agent, he explained the 40%+ growth target is incremental, leveraging partnerships with mortgage servicers (representing 1 million mortgages) that are not currently targeted by traditional agents, with minimal cannibalization risk. He affirmed strong cash generation and optionality for buybacks, with $36 million remaining on the authorization.

Tommy McJoynt of KBW asked if Hamilton is still facing premium growth headwinds from its discontinued lines of business. He also questioned whether the higher profit commission that impacted the expense ratio was an anomaly for the quarter or represented a new run rate.

Answer

CFO Craig Howie responded that the company still expects double-digit premium growth for the year, albeit at a slower pace than in the past, reflecting a disciplined underwriting culture. He clarified that the profit commission is not a new run rate; rather, it is accrued based on the performance of specific underlying books of business and can fluctuate quarter to quarter.

Tommy McJoynt of Keefe, Bruyette & Woods (KBW) inquired about the recent transfer of certain PREPA bankruptcy claims to a custodian, asking if this signals an intent to sell them, the potential buyer pool, and the criteria for selecting which claims to transfer. He also asked for management's view on the impact of the dismissal of five Puerto Rico oversight board members and sought clarification on a 10-Q disclosure about modifying National's settlement.

Answer

William Fallon, Director & CEO, explained that transferring $374 million in fully paid-off PREPA claims to a custodian creates more marketable securities with their own CUSIP numbers, but a sale is not certain. He noted that the claims transferred were from bonds that have been fully paid off, not a selective process. Regarding the oversight board changes, Fallon stated it is too early to determine the full impact but hopes it could be a positive catalyst for a consensual deal. He clarified the disclosure about the settlement modification referred to a past event where the agreement was effectively terminated.

Tommy McJoynt from Keefe, Bruyette & Woods (KBW) asked about the potential for a pull-forward in consumer activity for devices and vehicles ahead of tariffs, and questioned the opportunity for further operating leverage in the Global Housing segment's expense ratio.

Answer

President and CEO Keith Demings acknowledged a slight pull-forward in mobile trade-in activity but emphasized that the primary driver of Connected Living's outperformance was strong subscriber growth. For Global Housing, Demings confirmed there is an opportunity for continued leverage, driven by business growth, new client wins, and significant investments in technology and automation. CFO Keith Meyer added that approximately 80% of the housing costs are leveragable, as they are not commission-based.

Tommy McJoynt of KBW inquired about the key drivers behind the stronger-than-expected 10% organic growth in the Insurance Advisory Solutions (IAS) segment and sought clarity on the company's conviction in its updated guidance for negative rate and exposure impacts.

Answer

CEO Trevor Baldwin attributed the IAS strength to top-decile new business generation, with sales velocity at 22%, and a temporary pull-through of renewal exposures from large energy clients. He explained the negative outlook is based on a significant deceleration in property rates observed in June and sluggishness in client capital expenditures. CFO Brad Hale added that since rate and exposure have never been a primary growth driver, they are confident in their assessment of the potential downside.

Tommy McJoynt of Keefe, Bruyette & Woods (KBW) asked for the key drivers of the strong 10% organic growth in the Insurance Advisory Solutions (IAS) segment and the company's conviction in its updated forecast for negative rate and exposure.

Answer

CEO Trevor Baldwin attributed the strong IAS results to top-decile new business generation, with sales velocity at 22%, and a temporary pull-through of renewal exposures from large energy clients. He explained the negative outlook is informed by a significant deceleration in property rates observed in June and sluggishness in capital expenditures. CFO Brad Hale added that rate and exposure have never been a primary driver of their growth story, giving them confidence in the downside prediction.

Tommy McJoynt asked for an update on the premium leverage Lemonade can write on a gross basis and how the new reinsurance structure affects it. He also inquired about capital trends at the holding company level versus the insurance entities.

Answer

CFO Tim Bixby stated that the company's capital planning and its target premium leverage ratio of roughly 6-to-1 on a gross basis remain substantially unchanged. He explained that the company can now leverage its own captive structures to replace the capital surplus benefit lost from reducing the quota share. Bixby also clarified that while individual entities have different profitability profiles, the company manages capital on a consolidated basis and maintains a sufficient cushion of around $200 million.

Tommy McJoynt of Keefe, Bruyette & Woods (KBW) asked for clarification on the reduced guidance, questioning the split between lower variable brokerage fees versus recurring agent count fees. He also inquired which geographic regions were the primary drivers for the upwardly revised full-year agent count guidance.

Answer

Chief Financial Officer Karri Callahan explained the reduced guidance stems from three main factors: a slower-than-expected ramp-up of the REMAX Media Network, a more tempered outlook on variable broker fees, and a near-term revenue lag from the new Aspire program. Regarding the agent count guidance increase, Callahan credited strong international growth as the biggest driver, while also highlighting positive momentum and a key conversion in the U.S.

Asked about U.S. agent market share trends and the company's official stance on the recent NAR policy changes regarding listing cooperation.

Answer

The company believes its agent market share performance is slightly better than the industry trend due to the high productivity of its agents. Regarding the NAR policy, RE/MAX's official view supports maximum transparency and the broadest possible distribution of listings as being in the best interest of most consumers, while still providing guidance for situations requiring private listings.