Thomas Mcjoynt-Griffith

Thomas McJoynt-Griffith with KBW asked about the trajectory of the average premium per policy, considering primary pricing trends, changes in business mix (Tri-County, middle-aged homes, commercial policies), and the impact of these factors. He also sought clarification on the 5% average rate decrease, asking if it was specific to American Integrity or market-wide, and inquired about competitors' actions. Finally, he asked about the company's strategy for the upcoming 6/1 reinsurance renewal, specifically weighing options like taking savings, buying more coverage, or lowering attachment points.

Answer

President Jon Ritchie stated that the mix of business, particularly middle-aged homes and Tri-County, will elevate the average premium of the overall portfolio, leading to an upward trajectory for the average premium over the next 12 months, despite downward pressure on primary pricing (an average rate decrease of roughly 5% for American Integrity's 2025 annual rate filings). He clarified that the 5% rate decrease was specific to American Integrity's portfolio but consistent with broader market trends, noting that the regulator is prudent and no competitors are buying market share. For reinsurance, Jon Ritchie indicated that the market is advantageous for buyers, with abundant capacity and decreasing risk-adjusted pricing. He confirmed that buying habits would be consistent with prior years in terms of vertical limit and horizontal cover (third and fourth event coverage, like the 2004 storm season), with retentions consistent with the prior treaty year. CEO Bob Ritchie added that cat bonds offer flexibility and good opportunities.

Thomas Mcjoynt-Griffith asked for guidance on modeling the brokerage commission split as the market normalizes, seeking to understand the magnitude of drivers like agent mix and new business development. He also asked a housekeeping question about the cause of the year-over-year decline in corporate operating EBITDA and what a good run-rate assumption would be.

Answer

EVP & CFO Charlotte Simonelli explained that agent mix, where top agents take a greater share of transactions, is the biggest contributor to commission split pressure. She noted that only about half of agents are on a tiered commission table. For corporate costs, Simonelli attributed the quarterly decrease primarily to the timing of bonus and benefit allocations. She highlighted that materially higher employee benefit costs, due to increased usage, was a significant factor in the first half and could potentially continue into 2026.

Thomas Mcjoynt-Griffith of Keefe, Bruyette & Woods (KBW) requested guidance on modeling brokerage commission splits in a normalizing market and asked for the reason behind the year-over-year decline in corporate operating EBITDA.

Answer

CFO Charlotte Simonelli explained that agent mix, where top-performing agents handle a larger share of transactions, is the primary driver of commission splits. She also attributed the quarterly decline in corporate EBITDA to the timing of bonus and benefits allocations and highlighted that materially higher employee benefit costs impacted results in the first half of the year.

Thomas Mcjoynt-Griffith questioned the bottom-line underperformance in the Integrated Services (title) segment compared to other segments. He asked for quantification of the investment drag on the segment and a timeline for when those investments might conclude. He also asked what metrics define success for the 'upward' title ventures.

Answer

CFO Charlotte Simonelli explained the drag was due to several planned investments: recruiting high-producing agents, technology investments for the 'Reimagine 25' program with savings weighted to the second half of the year, and the build-out phase of the 'upward' title joint ventures. CEO Ryan Schneider added that the primary success metric for 'upward' is bottom-line profitability, complemented by strategic benefits like attracting and retaining franchisees.

Thomas Mcjoynt-Griffith asked for an update on the adoption of different buyer agent agreements, whether consumers are shopping agreements more, and how potential acquisitions would be funded.

Answer

CEO Ryan Schneider revealed that, surprisingly, over 80% of buyers are signing the 6-month exclusive agreement, indicating strong agent value communication. He believes consumer shopping happens during agent selection, not by comparing physical contracts. Regarding M&A, Schneider confirmed Anywhere would be a cash buyer, using its ample liquidity and positive free cash flow, and noted that synergies from deals provide a competitive advantage.

Thomas Mcjoynt-Griffith requested a more detailed breakdown of the strong October volume trends relative to mortgage rate movements and asked about the potential for AI to pressure industry fees or simply improve agent efficiency.

Answer

CEO Ryan Schneider explained that the strong October performance was surprisingly consistent throughout the month, even as mortgage rates rose, and was geographically widespread. Regarding AI, he compared its future impact to the internet, predicting it will permeate all operations to drive efficiency, create better and faster experiences, and ultimately contribute to a consolidation of agents in the industry, which he views as a positive trend.

Tommy McJoynt-Griffith of Keefe, Bruyette & Woods inquired about the potential magnitude of commission rate increases as business mix shifts and sought clarification on the scope of projected reductions in service costs.

Answer

CFO Mark Jones Jr. explained that while not providing a specific number, commission rates could recover to levels seen two years prior as business moves away from state-run plans. He clarified that the 'cost of service' reduction refers specifically to the service department's total expenses, driven by AI efficiencies, but noted overall margins might face pressure in Q3 from hiring before improving in Q4.

Thomas Mcjoynt-Griffith inquired about Goosehead's strategy and operational capacity for partnering with large mortgage servicers and the expected cadence of adjusted EBITDA margin expansion for the remainder of the year.

Answer

CFO Mark Jones Jr. confirmed active discussions with large mortgage servicers, highlighting the significant market opportunity and Goosehead's capacity to scale. Regarding margins, he reiterated the full-year goal of growing Core Revenue faster than expenses but declined to provide specific quarterly guidance due to the timing of strategic initiatives.

Thomas Mcjoynt-Griffith asked about the drivers behind the significant Q4 contingent commission true-up and the outlook for EBITDA margins in 2025, including any potential drag from AI investments.

Answer

CFO Mark Jones Jr. explained the large contingent commission was due to better-than-expected core loss ratio performance from major carriers. While guiding conservatively for 2025, he affirmed the long-term normalized range of 80-85 basis points remains unchanged. He added that Goosehead expects core EBITDA margin to expand as core revenue outpaces expense growth, though total margin could see puts and takes from the lower contingent commission forecast.

Thomas Mcjoynt-Griffith inquired about the sources of new referral partner activations, the performance of the new corporate agent class, and the financial impact of recent hurricanes.

Answer

CEO Mark Miller affirmed that home closing transactions remain the primary go-to-market strategy, with the company adding more referral partners to maintain lead flow. CFO Mark Jones Jr. noted that new agents are performing well on a tenure-adjusted basis despite the tough housing market. Regarding hurricanes, he explained they cause temporary new business moratoriums that can shift revenue between quarters but typically do not impact long-term results.

Thomas Mcjoynt-Griffith from Keefe, Bruyette & Woods asked for characterization of commission rates, clarification on whether the 17 new branch additions were a gross or net figure, and details on the inorganic contribution from acquisitions baked into the full-year guidance.

Answer

Richard Bunch, an executive at TWFG, described commission rates as 'fairly stabilizing,' with new business incentives helping to offset lower rates from E&S markets. He confirmed the 17 branch additions were a gross number, which is higher than historical pre-disruption levels. Regarding guidance, Bunch stated it aligns with their analyst model for acquisitions, and a strong M&A pipeline provides the confidence to raise the outlook.

Thomas Mcjoynt-Griffith of Keefe, Bruyette & Woods asked if the higher-rated primary issuance in Q1 changes the outlook for normalized PVP to par, questioned the competitive landscape for secondary market insurance, and sought details on the strong performance of the Asset Management segment.

Answer

COO Robert Bailenson clarified that the higher-rated issuance was a business mix shift due to market volatility and does not change their full-year outlook. CEO Dominic Frederico added that the strong issuance volume shows robust underlying demand. On competition, Frederico stated it's the same single competitor as in the primary market, but Assured Guaranty is better positioned for larger, higher-rated credits. CFO Benjamin Rosenblum explained the Asset Management segment's strength was due to booking Sound Point's typically strong fourth-quarter results on a one-quarter lag.

Thomas Mcjoynt-Griffith of KBW inquired about the company's exposure to the Washington D.C. market, the underlying causes of financial stress in certain insured health care facilities, and whether the changing political landscape in the U.S. and Puerto Rico could help advance a resolution for PREPA.

Answer

CEO Dominic Frederico and executive Robert Tucker stated they have no significant D.C. market exposure that causes them concern. On health care, Dominic Frederico explained that it's an operating risk driven by factors like high labor costs, but the company has an exceptional track record of managing these situations. Regarding PREPA, Frederico expressed confidence in their legal position, citing the successful LBIE litigation as a model, and stated that while government help would be welcome, they are prepared to pursue their rights through litigation for as long as it takes.

Thomas Mcjoynt-Griffith of Keefe, Bruyette & Woods asked if the upcoming U.K. water regulator's rate determination would be an impactful event for loss adjustments, inquired about historical precedents for similar distressed utility situations, and questioned if the company would pursue a loss mitigation strategy by purchasing discounted uninsured bonds.

Answer

CFO Benjamin Rosenblum stated that while the rate determination is being watched, it is not expected to significantly change their loss numbers as the issue is expected to play out over the next year. President and CEO Dominic Frederico added that there are no direct historical precedents due to the unique nature of these regulated monopolies and confirmed the company would not purchase uninsured bonds, as it would simply increase exposure without a loss mitigation benefit.

Thomas Mcjoynt-Griffith sought clarification on the term 'scale back' regarding the under-65 Health segment and asked for commentary on the overall health and trends within the Medicare Advantage market.

Answer

Executive Patrick Thompson clarified that 'scaling back' the under-65 business is a partial reduction, not a full exit, and the business is being rebaselined. He described the Medicare Advantage market as being in a temporary hard cycle but with strong long-term tailwinds. Executive Steven Yi added that the political climate could become more favorable for Medicare Advantage, citing recent positive CMS payment rate updates.

Thomas Mcjoynt-Griffith of Keefe, Bruyette & Woods asked about the impact of the business mix shift on the expense ratio and sought to understand the conviction behind the company's casualty growth, given that peers are pulling back. He also requested clarification on the Two Sigma Hamilton Fund's year-to-date return.

Answer

CFO Craig Howie explained that the increase in the acquisition expense ratio was driven by a business mix shift towards casualty, pro rata business, and property binders, as well as higher profit commissions. He noted the other underwriting expense ratio continues to decline with scale. CEO Giuseppina Albo expressed conviction in their casualty growth due to their modest historical exposure, the opportune timing of their A.M. Best upgrade, a highly selective client strategy, and the use of small, balanced line sizes. Craig Howie clarified the 7.9% Two Sigma return was a year-to-date figure through April 30, 2025.

Thomas Mcjoynt-Griffith from Keefe, Bruyette & Woods asked for details on how the shift in business mix impacted the expense ratio, particularly the acquisition cost component. He also questioned how Hamilton gains conviction in the quality of its growing casualty book when peers are non-renewing business, and sought clarification on the Two Sigma return figure.

Answer

CFO Craig Howie explained that the acquisition expense ratio increased due to a business mix shift towards higher-commission casualty and pro rata business in the Bermuda segment and property binders in International, as well as higher profit commissions. He noted the other underwriting expense ratio continues to decline with scale. CEO Pina Albo addressed the casualty growth, stating that Hamilton's relatively recent and modest entry into the space, combined with its A.M. Best upgrade, creates a unique opportunity to selectively partner with high-quality clients as larger, long-time players pull back. She noted Hamilton takes small shares (1-2%) on these quota share deals to manage exposure. Craig Howie clarified the 7.9% Two Sigma return was the year-to-date figure through April 30.

Asked about the future trajectory of the expense ratio and the mechanics of funding the share buyback program.

Answer

The company expects the expense ratio to continue improving each year as it scales. The share buyback program has full flexibility and can be funded by capital at the holding company and, predominantly, through dividends from the operating companies.

Thomas McJoynt-Griffith of Keefe, Bruyette & Woods asked about the potential for further reduction in the expense ratio and inquired about the source of capital for the company's share buyback program.

Answer

Craig Howie, Group CFO, stated that Hamilton continues to target a better expense ratio each year as the company scales. He also explained that the share buyback program has flexibility, with capital available at the holding company but predominantly sourced from dividends from the operating companies. He noted $140 million remains on the authorization.

Thomas Mcjoynt-Griffith of Keefe, Bruyette & Woods inquired about Root's new business mix, the quarterly cadence of growth spending, and the strategy for state-by-state expansion.

Answer

CEO Alex Timm explained that the direct channel saw exceptionally strong seasonal growth in Q1, which tempered the partnership channel's mix percentage; he expects the partnership share to increase for the remainder of the year. Both Timm and CFO Megan Binkley noted that Q1 is typically the strongest quarter for marketing spend due to tax season. Regarding state expansion, Timm described a measured approach, launching with conservative pricing and ramping up marketing over 6 to 12 months as they gain confidence in loss cost data.

Thomas Mcjoynt-Griffith of Keefe, Bruyette & Woods inquired about the expected direction of premium per policy for the upcoming year, the sustainability of the Q4 reinsurance cession rate, and requested specific data on customer retention improvements.

Answer

CEO Alex Timm stated that while modest rate decreases may apply pressure, growth in the partnership and independent agency channels, which have higher-value policies, should keep premium per policy flat to modestly increasing. He declined to share specific retention data but noted churn has normalized. CFO Megan Binkley confirmed that the Q4 reinsurance cession rate of approximately 9% is a good run rate for the future, as the company's focus has shifted to per-risk and catastrophe covers.

Thomas Mcjoynt-Griffith of Keefe, Bruyette & Woods inquired about Root's plans for increased growth spending, the impact of potential rate reductions on policy retention, and the difference in retention rates between its direct and partnership channels.

Answer

CEO Alex Timm confirmed plans to reinvest profits into growth, focusing on expanding partnerships and entering new marketing channels and geographies. CFO Megan Binkley added that while spending will increase, it will remain disciplined and dependent on market conditions, without providing specific guidance. Timm also explained that retention rates are improving as the policy book matures post-hypergrowth and that the partnership channel exhibits significantly higher retention and premium per policy compared to the direct channel.

Thomas Mcjoynt-Griffith asked why tariffs are not expected to have a significant impact on the mobile business and questioned if the improved Housing outlook implied a slightly weaker outlook for the Lifestyle segment.

Answer

CFO Keith Meier explained that the mobile tariff impact is mitigated by risk-sharing program structures and collaboration with clients' large, developed supply chains. President and CEO Keith Demmings added that the monthly-pay nature of the business allows for nimble adjustments. Regarding guidance, Mr. Demmings confirmed it was a fair interpretation, noting the Lifestyle outlook now more fully incorporates macro and tariff impacts, though the segment is still expected to grow.

Thomas Mcjoynt-Griffith of Keefe, Bruyette & Woods sought clarification on the one-year payback period for the $25 million in 2024 investments, asked about the nature of new investments planned for 2025, and questioned if increased scale in the Housing segment alters the outlook for its combined ratio.

Answer

CEO Keith Demmings confirmed that the $25 million invested in 2024 is expected to generate a corresponding $25 million in positive EBITDA in 2025. He stated that the 2025 investments are for entirely new programs with different 'marquee brand' clients. Regarding the Housing segment, Mr. Demmings said that despite the growth and scale, they expect a strong mid-80s combined ratio for 2025, even with the impact of California wildfires, and will reassess the long-term target as the year progresses.

Thomas Mcjoynt-Griffith asked if the monetization of new subscribers from cable and Asia Pacific differs from traditional customers, sought clarification on the 2025 investment spend outlook, and inquired about the drivers of the strong Q4 forecast for Connected Living, particularly regarding trade-in volumes.

Answer

President and CEO Keith Demmings stated that the monetization for new subscribers is 'pretty well aligned' with their standard model. He confirmed that the 2024 investment spend of $21 million year-to-date will sunset, with a new bucket of investments planned for 2025 to support strong commercial momentum. For Q4, Demmings cited trade-in seasonality and revenue from new clients as key growth drivers. CFO Keith Meier added that they expect increased promotional activity in Q4 related to the new iPhone cycle.

Thomas Mcjoynt-Griffith asked for the percentage of new Car sales that are cross-sells from existing customers. He also sought clarification on the Chewy partnership, asking if the warrant expiration was separate from the ongoing business relationship.

Answer

CFO Timothy Bixby reported that approximately half of new Car sales now come from existing customers, an increase from about one-third previously. He clarified that the Chewy partnership is performing well and that only the warrant agreement was terminated to switch commission payments from equity to cash, with the commercial relationship remaining strong and unchanged.

Thomas Mcjoynt-Griffith questioned the trajectory of growth spend, asking if the absolute dollar amount for 2025 would remain stable in future years to maintain a 30% IFP growth rate. He also explored the potential to rely on cross-selling instead of new spend and inquired about the primary product focus for the 2025 growth investment.

Answer

CEO and Co-Founder Daniel Schreiber clarified that while absolute growth spend will continue to increase beyond 2025, the rate of that increase will decline, which is a key component of the plan to reach EBITDA breakeven. He affirmed that cross-selling is a highly efficient growth lever that will become increasingly powerful. For 2025, he indicated a gradual strategic shift where the car insurance product will begin to represent a larger portion of growth, complementing the existing drivers of pet and renters insurance.

Thomas Mcjoynt-Griffith asked for a ranking of the key drivers that will bridge the gap from a negative $150 million EBITDA in 2024 to positive EBITDA in 2026. He also requested an update on the trend of policies per customer as a measure of cross-selling success.

Answer

President Shai Wininger and CFO Timothy Bixby detailed the path to profitability, emphasizing tremendous operational efficiency, where top-line and gross profit growth far outpace expense growth. They highlighted that this dynamic has been consistent and is the primary driver. On cross-selling, Bixby noted that about 4.6% of customers are multi-policy, a stable percentage that indicates significant growth in absolute numbers, with these customers showing stronger retention and risk profiles.

Thomas Mcjoynt-Griffith of Keefe, Bruyette & Woods inquired about the strategy behind selling the Eaton Fire subrogation rights, the impact of this early-year catastrophe loss on the company's reinsurance protection for 2025, and whether management could provide any bottom-line guidance for the full year 2025.

Answer

Chief Financial Officer Stewart Ellis explained the sale of subrogation rights was an economic decision based on the attractive present value of the proceeds versus a future legal recovery, and was not driven by liquidity needs. Both Ellis and CEO Rick McCathron clarified that the loss barely penetrated the first of three reinsurance layers, having no meaningful impact on protection for the rest of the year. Regarding full-year guidance, McCathron deferred detailed projections to the company's Investor Day on June 12, though Ellis noted that full-year trends could be inferred from existing guidance on revenue, loss ratios, and operating expenses.

Thomas Mcjoynt-Griffith asked about the rationale for selling a shell insurance carrier, the growth outlook for the HHIP program into 2025, the relative growth rates of Hippo's segments, and whether the recent share repurchase was a one-time event or part of a recurring strategy.

Answer

President and CEO Rick McCathron explained the shell carrier was a dormant, redundant asset that they could monetize. He also stated that while HHIP is writing new business, the IaaS and Services segments will remain the primary growth drivers in the short term. CFO Stewart Ellis characterized the share buyback as an opportunistic use of proceeds from the First Connect sale, noting the company will continue to look for such opportunities as it nears profitability.

Thomas Mcjoynt-Griffith asked about MBIA's capital return strategy, specifically the potential for more frequent special dividends from National, and the company's objectives within the PREPA creditor group, balancing recovery maximization against resolution timing.

Answer

William Fallon, an executive at MBIA, explained that while smaller, more frequent special dividends are possible with regulatory approval, the company prefers more certainty on the $800 million PREPA claim before pursuing them. Regarding PREPA litigation, Fallon stated that both recovery value and timing are critical, and MBIA is currently aligned with other bondholders in seeking to expedite the process, with the main obstacle being the Oversight Board's position.

Thomas Mcjoynt-Griffith of Keefe, Bruyette & Woods asked about the level of excess capital at National, whether the company is seeking approval for a capital release, and for confirmation on the implied recovery rate for a recent PREPA claim.

Answer

Executive William Fallon explained that MBIA does not calculate 'excess capital' but focuses on securing extraordinary dividends when appropriate. He stated that further progress on the Puerto Rico situation is needed before discussing another large dividend with regulators, beyond the standard annual dividend. Regarding the PREPA recovery rate, Fallon confirmed the analyst's calculation method was 'logical and reasonable' without providing a specific figure.

Thomas Mcjoynt-Griffith sought clarification on whether any one-time items lowered Q3 expenses and asked about the typical agent count seasonality for the U.S. and Canada heading into the spring.

Answer

CFO Karri Callahan confirmed there were no significant one-time items benefiting Q3 expenses but pointed to an expected Q4 impact from hurricane-related affiliate support. She explained that U.S. and Canada agent count seasonality typically follows home sales, with Q4 and Q1 being slower before ramping up in Q2 and Q3.