SeaBright Insurance Holdings Inc. (SBX)
Q1 2010 Earnings Call
April 27, 2010 4:30 pm ET
Philip Romney - VP of Finance and PAO for SeaBright Insurance Holding.
John Pasqualetto - Chairman, President and CEO
Richard Gergasko - COO
Scott Maw - SVP and CFO
Mike Grasher - Piper Jaffray
Bob Farnam - KBW
Michael Nannizzi - Oppenheimer & Co.
Adam Kauffman - Macquaire
Matt Carletti - JMP
Mike Grasher - Piper Jaffray
Robert Paun - Sidoti & Company
American Electric Power Company, Inc. Q1 2010 Earnings Call Transcript
» Cincinnati Financial Corp. Q1 2010 Earnings Call Transcript
» Advance America, Cash Advance Centers, Inc. Q1 2010 Earnings Call Transcript
Good afternoon ladies and gentlemen and welcome to the SeaBright Insurance Holdings’ first quarter 2010 earnings conference call. At this time, all participants have been placed in a listen-only mode. Following the formal remarks, the call will be open to questions. It is now my pleasure to introduce the host of today’s call Mr. Philip Romney, Vice President of Finance and Principal Accounting Officer for SeaBright Insurance Holding.
Thank you Jennifer and welcome to SeaBright’s first quarter 2010 conference call. Joining me on the call today are John Pasqualetto, Chairman, President and Chief Executive Officer, Richard Gergasko, Chief Operating Officer and Scott Maw, Senior Vice President and Chief Financial Officer. Before I turn the call over to John for opening remarks, I’d like to remind you that statements made during this conference call that are not based on historical facts are forward-looking statements. These statements are made in reliance on the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995 and are subject to uncertainties and risks.
SeaBright’s future results may differ materially from those anticipated and discussed in forward-looking statements. Some of the factors that could cause or contribute to such differences have been described in the press release issued today and in SeaBright’s filings with the SEC. We refer you to these sources for additional information.
I’d also like to point out that remarks made during the conference call are based on information and understanding that are believed to be accurate as of today’s date April 27th, 2010. This call is the property of SeaBright Insurance Holdings, Inc. Any distribution, transmission, broadcast or rebroadcast in any form without the express written consent of the company is prohibited. With those announcements complete, I give you John Pasqualetto. John?
Thank you Phil. Good afternoon and welcome to today’s call. Before turning the call over to Rich and Scott to review our operating and financial results, I’d like to provide some highlights regarding our most recent quarter as well as offer some insights into how 2010 is shaping up. The first quarter of 2010 continued to present our industry with the same challenges experienced last year and SeaBright certainly encountered headwinds that inhibited our premium growth. However, I'm pleased to report that despite these pressures on the top line, the company achieved positive results during the quarter. Consistent with previous quarters, SeaBright’s first quarter results were shaped by soft market pricing and high end employment.
During the recent quarter, we experienced no changes in competitive landscape. Again, that’s characterized by market participants that continue to employ in our opinion irresponsible pricing tactics. We also continue to feel the lingering effects of the economics recession.
Despite these obstacles, SeaBright results for first quarter of 2010 were solid. Excluding realized gains in our investment portfolio SeaBright achieved an almost 4% increase in revenues during the quarter. While our traditional core business was flat year-on-year, strong growth in alternative markets and small maritime program enabled us to achieve an increase of 26% in customer count when compared to the same period last year. As with the prior quarter, these two products segments continued to gain traction during the first quarter of 2010 contributing to our premium production and reflecting the ongoing success of the strategic investments we made in those units.
While net income and customer count increased during the first quarter gross written premiums were down 70 million to 76 million compared to 79.3 million for the same period in 2009. For the first quarter, net premiums written were 70.3 million, down from 72 million posted during the same period in 2009 again, reflecting the impact of the increased competition and the economic realities we all face.
Clearly, we at SeaBright cannot forget with any precision the length and breadth of the soft cycle and the recovery of our economy. We recognize that we must continue to do the right things during these difficult times. Growth for us is not the top priority in 2010. The right thing is adequate pricing and sound risk selection, which are fundamental to gain needed profit margin. Our market share is not a priority as witnessed by our actions in Illinois and price increases in California. During the past quarter, our continued focus on disciplined pricing resulted in a 4.3% overall average price increase.
In addition to underwriting another right thing during these difficult times is savvy and hard hitting expense management driving down cost to better match with our earned premiums, without damaging our ability to take advantage of the market turn when it happens. As you can seem, these efforts reduced our expense ratio by 3.1 during the first quarter. Finally, doing the right things continued to demand balance sheet integrity, taking due care to attend closely the adequacy of reserves providing solid testimony to our considerably and growing financial strength.
To this end, we increased our estimated loss and allocated loss of adjustment expense for the current year to 61.5% from 60% at year end 2009.