Alright. We're gonna go ahead and get started here. My name is Tommy McJoint, and I lead coverage of the Florida specialty carriers here at KBW. And today, we're excited to be joined by American Integrity. American Integrity has been around for a couple decades, but only entered the public markets here with their IPO just this past summer. So we're happy to have them today. And we've got Bob Ritchie, John Ritchie, and Ben Lurie. So appreciate you guys here. And David Clark is also in the audience there. So Bob, can I turn it over to you for some intros? Sure. Thanks. Good morning everyone. So I'll give a quick just two minute overview and then we'll begin to invite questions first from Tommy. So as Tommy mentioned, nearly a twenty year old company And I'm Bob Ritchie, founder and CEO. And we've been based in Florida for the entire time frame. And we're a product of nineteen years of very disciplined underwriting with the founder led organization. And as Tommy mentioned, we just became public just literally weeks ago in May. And so I want to share where we are at the end of Q2. And then most importantly, we'd like to share where we see our interim growth journey here in the next couple of years. So at quarter end, Q2 of this year, we managed just under 399,000 customers. Just hit the 400,000, but that was after the close of the quarter. So that was a big deal for us. And this is up more than 50% year over year, but here's the most important thing I think. Our voluntary writings, different from other companies, they're up 19%. And it's supported also by a retention that is now getting back into more normalcy into the low eighties. As I look at the strong demand through our agency distribution, our builder partners making us very unique, We reckon we're writing three out of every 10 new homes being built in Florida right now. And the national insurance companies. Those nationals need capacity, partner with companies like ours. So this has positioned us as one of the most active voluntary riders in our little space called Florida Residential Property Insurance. Financially, the momentum is clear. Look forward to Ben, our CFO, going even stronger. But we've written nearly $500,000,000 of top line, 132,000,000 of net, and very importantly, we delivered $69,000,000 of adjusted income. Our combined ratio was at 58.1% and an annualized adjusted ROE of sixty one point six percent and fifty five point five percent in Q2. We closed the quarter with $3.00 $2,000,000 of equity on the balance sheet. So our 42% increase in voluntary policies written during the first half versus the same period has solidified American Integrity as the top three to five domestic writer in Florida in terms of current policies in force and most importantly voluntary policies written. We believe this puts us in a very very unique position And it's a reflection of focused execution in the post reform era in Florida, which has helped every company. Yet this is also positioning us as perhaps the fastest growing voluntary market leader in our peer group. Now from a competitive standpoint, we are now the third largest domestic carrier. Now I'm going to take out citizens, I've got to take out some nationals like State Farm. So it's that little space called Florida domestic, we're the third largest. In terms of policies in force. The scale of our voluntary new business writings is unmatched. In Q1, we wrote over 21,000 voluntary policies. Compare that with others, and we are in a position where we think that this is a significant difference. Our citizens depopulation helped reset the market and we opportunistic, like others did, took out Trump citizens. Today, the citizens account is around 7 and $80,000 of policies. Here's what we think. 80% of that depopulation opportunity is behind us. And we were built as a takeout company twenty years ago. Takeouts are great. They're opportunistic. They're not a continuing strategy, we believe, for growth. That can only happen in the voluntary market. So here's what we're doing to grow responsibly in our space with our stripes and with our underwriting prowess. First, the Tri County region. We had not ridden in Tri County, a little bit in Palm Beach County because of the takeouts, but nothing in Miami Dade, nothing in Broward, pre reform. And so we look at that marketplace, those three counties, nearly 30% of Floridians live in that space, and it represents about a third, we have about 7%. So our broad distribution with builder agents, national companies, and yes, appointing independent agents, place us in a very good position for us to enact growth within our entire four walls, that is the state of Florida, with our same approaches, same people, distributions in play. Here's another really good important growth for us. We're calling these middle aged roofs. As we got through this last crisis to say safe, secure and solvent, we did an immediate pivot to new roofs because that was the primary thing that was causing the dismay and decay of many of our competitors, were old roofs and the ability for people to game the laws. That's changed now and for example in Central Florida we now can reenter the very space that we had to pivot from just seven or eight years ago. And so now with the Simon of Benefits, with the one way attorney fee statute being abolished, That playing field has changed. And we can responsibly return to what we call this middle age group. Call it around eleven-twelve years. So we're zero to five is where we are dominant. Getting a pivot up to ten to twelve years opens up a lot of a lot of business for us. But here's the thing, we can responsibly return to the same neighborhoods with the same agents, same housing stock. And it's not that that part of Florida had rooftops that were more inferior, it's just where the roofers began to infiltrate. And so this is proven business with the new laws and with a few of the things that we have in our policy language that we can take back and grow. Here's the third thing, very important. We have a 40% quota share. That will change. Some of the proceeds of our IPO will be to gradually reduce that quota share. Which isn't adding risk, but it's keeping more of the economics. And so the disciplined business we've written here, we're lifting net earned premium. So at the end of Q2 twenty twenty five, our company stands larger, stronger and more profitable than ever. But more importantly, we've defined a growth path that isn't new, it's established. And it's clear and it's disciplined and we're reentering again middle aged roofs, Tri County, and looking at keeping more of the economics as we step into our quota share and step it down. So these are actions of how we're outpacing peers, how we're writing new business, and it strengthens our leadership position in the state of Florida. So I feel like we're not keeping pace in Florida, we're setting the pace. And in doing it in a way that creates lasting value. With agents, with policyholders, and with investors. Thanks. So maybe to start off, just to speak to the conservative nature of American integrity. 2022 obviously marked a, you know, a significant point with the legislative reform that happened there, but surviving in the pre reform market was important, and you you guys did manage through that cycle. Can you talk about what American integrity did during the, call it, 2016 to 2022 time period that enabled you to not just survive, but do well in that time period when many insurers in Florida ultimately failed or had to pull out of the market? Look, I'm very happy. I have deep respect. One competitor is in the room here. I have deep respect for any competitor that got through the worst crisis, man made, in the history of the Florida residential property insurance market. And back then I used to tell people we need more not less. Now, and I love having healthy competition. Here's what we did and we're not the only one. To stay safe, secure and solvent. We had to jettison risky business. Now it wasn't risky because of the underwriting dynamics of either the customer or the home. It was just bad laws and being able to game system. And so we had to do immediate pivots. And some of the ways we did that were inclusive of being incredibly active in Tallahassee. We're about the only one. I'm not saying that we wouldn't love to have some company up there. I'm also not saying that we singularly effective reform. That we're not big enough. We don't have enough money. But we were active and involved. Number two, we didn't sacrifice our underwriting platform and our risk characteristics. Got off old roofs. And that was incredibly important. Number three, we were able to capitalize, Tommy, on the distribution that has taken twenty years to build. We have an enviable preferred agent network that allows us to get top door business from many of these agents. But the other thing we did, as I brought in a head of sales that I had worked with at American Modern, we strengthened the other distribution pillars. Namely builder agents. And these are agents outside of Florida that control the companies that build homes and they get a first entry for that homeowners insurance. We're rating three out of 10. The other thing we did is we continued to appoint national companies. Consider Allstate, USAA, Liberty. As a matter of fact, for State Farm because they do it on their own accord, we're partnering with every national company that wants the auto but doesn't want the homeowners. But finally, as we survived through that crisis, it was living with austerity, fighting like hell for reform and running our company and portfolio as if reform never would happen and then fighting for it. Yeah. And so, you know, that leads to thinking about the competitive environment today, you know, post reform. We have seen some capital formation. You IPO ed this summer. We've seen other companies IPO and raise capital. Naturally, capital flows to where returns are attractive. Have you, in any sense, irrationality come to Florida with the capital that's been formed there? No. Here's one key difference. Different from California. I don't mean to pick on California. Our commissioner is not elected, it's appointed. And so therefore, Jaworski or even anybody in that chair has to make sure rates are not either excessive or insufficient, right? Or discriminatory. And so what I'm seeing Tommy, are the new companies coming in. I see no one being allowed to get a rate approval through that would buy business beyond a 100 combined ratio. That's really important number one. Number two, we need more not less competitors. There's 8,000,000 rooftops in Florida. We have 400,000. There's a whole lot of stuff to ride. And we need more responsible companies coming into Florida. So the issue, as far as I'm concerned, is not scarcity. It's responsible competition and fortunately because of the dynamics, as much of a bad rap as Florida gets, and that's fair, the thing that is sacrosanct is the independent leadership of the Office of Insurance Regulation. John, anything else you want to add on to that? No, I think you summed it up pretty And so I realized, there's some new companies. Now some of the companies are forming reciprocals, so they're part of that same ownership. Great. Bring it on. And then we have some brand new ones that have come in, like Mangrove, like Orange, and those are responsible players. I think competition is healthy. Some of those companies have been formed and primarily taken the initiative to grow through Citizens takeouts. Let's talk about that topic for a second. In your opening remarks you quoted a number thinking the citizens depopulation effort is about 80% of the way through. By my math I had 60% of the way through June so give or take that number. There is still some opportunity for additional Citizens takeouts and you guys have participated. Is that still an important piece of the growth element for you guys? Let's do a pivot. Tommy, as you know, these Citizens takeouts are highly accretive to earnings earnings at the beginning. They don't carry an additional cat reinsurance load until you have your cat renewals, and they don't have the same acquisition costs that normal policies would. So they're a big bolster to earnings. That said, the long run, you're getting married to these policies. These are going be your customers for the long run, and you need to be prudent and selective about who you want to take on to your books, and I think we've done a very good job of that. There's been a high watermark of about 1,400,000 policies, and there's just under 800,000 policies now, as Bob had mentioned. We think that the high watermark or the low watermark should be about 600,000 before the risk starts to get problematic. Now, you're bringing in Citizens is still writing business, so you could argue we're in the sixth inning or in the eighth inning, and I think either is reasonable. But either way, I think the best days for Citizens takeouts are behind us, and as we go forward, we intend to still participate in takeouts very selectively, but not to the magnitude that we've done in the '4. Yeah, that's all fair. And so as we think about other growth opportunities for American Integrity, expanding to other states is also important. You do have some presence in other states through your relationships with homebuilders. How important is state expansion? And maybe to help frame it for the audience, is thinking about American Integrity being in any way not 90% plus in Florida in, call it, three to five years, is that reasonable? Or should we think of American Integrity as still majority Florida? So we're a Florida specialist. That is who we are at the core of our company. And the primary reason that we expanded initially into South Carolina and Georgia and soon North Carolina is exactly what you just described. It's the homebuilder agents that were looking for additional capacity. Outside of Florida, we thought that those geographies we could prudently underwrite and place business there, but what we're getting also in return is more buying power back in our home state of Florida. So if you look forward the next couple years for American Integrity, it is still going to be primary Florida carrier. But certainly, there will be some writings that are outside of the state, but it's all strategic and thoughtful in terms of the the why and certainly the where. Because there are certain geographies for instance where they're looking for capacity that we're not interested in writing in such as California, Texas, Louisiana. But the states that we know we can profitably write business and we can afford that capacity, we will, But we aren't going to lose focus of who we are, which is a Florida specialist. Yeah. So we've talked about a few different avenues for growth here and I'd put you on the spot here to sort of rank order their priorities and I'm gonna list them for you and ask you to rank order them. If you think about the Tri County area, writing new roofs, writing in other states and then citizens take out. So if I take those four opportunities, if you could rank order them everything Absolutely. About the The core of our growth in these next series of quarters rests in Florida. That's where we've become an expert, it's where it is. Let's look at the, let's talk about Tri County. There's no question that's toward the top but right near the top is what I'm going to call returning to riding middle aged roofs but I'd like to focus on Tri County. As I mentioned nearly 3026% is the number for those three counties of where Floridians live. There's 2,400,000 rooftops. 2,400,000 in those three counties. And we don't have to win very many times for business at our terms, at our rates, to enact a very good growth curve here. And because it's been a greenfield and now fortunately because we do have the builder relationships and the national insurance companies, we already have a head start on writing business there. We hadn't written in Miami Dade in so long. We had to file new rates. They were twelve years old and inadequate. So those are done. We have no legacy, if you will, in Miami Dade. Clean slate. Very, very, very excited about writing quality new business, new builds, quality h o three and quality condo h o six business. And so it's starting, we've got the apparatus, we don't need to lever up people and that's beginning. The second part are these middle age roofs. Before the crisis, we were dominant. If you're going to write in Florida and be a dominant writer, you're going have to pick a place, or maybe several. And some have picked South Florida, some have picked Greater Tampa Bay, Some have chosen, which we did, heretofore before the crisis, Central Florida. And there's an acronym called SOLO. But we actually coined it and then the rest of the industry, it was management shorthand for the roofer nonsense. And it's not that these roofs were so much inferior in Central Florida. It just weren't Jasper's and no one started. Seminole, Osceola, Lake and Orange. In those four counties, especially in Orange County, we were dominant. We had 40 some odd thousand units in Orange. That got all the way down to 8,000 based upon where the reform needed to happen. Today we're back into that area writing what we call middle aged roofs at our prices and it's a dominant part of how we're going to grow. So those two are kind of linked together. Now there's other things that we're doing as well. They will not be part of a substantial growth but we are building blocks successfully, building the underwriting form, claims, actuarial all beforehand in commercial residential. We're not alone if you're the carriers are doing it. So we're not looking at literally, figuratively burning our way into that. This will be garden style apartments and it will be very measured. But that's an important part, so I would rank that as third. And then fourth, out of state. We just crossed 15,000 policies. South Carolina took us two and a half years because we're doing it slowly the right way, but that's a good adjunct for us. And Georgia we entered last year we're entering North Carolina in just a couple of weeks that'll be slow as you go but it will be a very important growth pattern here in this current time frame we're growing where we're dominant where we know where we have brand where we have influence and where we know we can make money and that's Florida anything else I've missed great I'm happy to take any questions from the audience if there are any. Can we get a microphone up here in the front? We get a can project. Be vocal. How comfortable are you with CAT models overall and with the reinsurance coverage of your competitors within the state? Are they adequately protected if the big one hits in your view? I'm going to have John start. I'll do some math on, but go ahead. Yes. So in relation to the CAT models, yeah, I think relatively, we're comfortable with it. Now there is, our opinion, still some fat in the system because they introduced some social inflation loads during the litigation crisis in Florida, haven't been removed. So you could make the argument that they are somewhat overstated in terms of the PMLs that are being popped out of there. In terms of the broader competitive marketplace in terms of protection from a large event, You know, I I think on a single event basis, certainly, I think most people have adequate coverage. We all know the large event in terms of geography location that would cause problems, a cat five in Miami, a cat five into Tampa going west to east, you know, those are the those are the big ones. It's probably also important to note a multiple event season just trying to see what sideways coverage they are purchasing for multiple events beyond just the first and the second. For us, we look at the 2004 storm season on a frequency and severity basis and we purchase to cover that type of event season and also the individual storms. And we don't have access, our brokers do so it's all third fourth hand even. We don't have access to towers. We used to. They used to be in rate filings, now they're trade secret. We believe that we're in a minority of protecting the way we do for horizontal multiple event cover. As far as I think your second question was whether or not competitors are buying enough reinsurance a day. Look, again, don't have optics. We can hear rumors as much as you can. I'm not here to disparage any of our competition. We need every one of them. I will tell you this though, proudly. That while we may have an inside view, and we do, of our tower and where it sits and where the working layers are, we've never deviated from secondary classification factors ever. And so we're telling the full story to ourselves first, that's important, to reinsurers, now to investors. We take no liberty or no creativity in adjusting secondary classification factors. And I'm not sure that that's always upheld in the industry. So what do you mean by adjusting secondary classification factors? Sure. So the models that you use to project a cat loss take a list of variables into account. What it's going to cost to replace a roof, what construction costs are going for, and the models allow you to adjust those costs and other underlying factors in order to determine an outcome. We take a very conservative view at every layer of the modeling process when we're modeling our outcomes, whereas other people might be aggressive about how affordably they can replace a roof or what their construction costs might be. So when we say that we don't change the secondary factors, we're being very conservative in all the underlying assumptions that are built into those models. Sea level is another important one that can be interesting. Sorry, sea level? How does that work? Amongst the factors that Ben and Bob have been touched on, one of them is elevation and just you know, how high up is the structure and that's a variable that is editable to a certain extent when you are internally modeling your PML for your portfolio. We write precious little. I love it. There just isn't enough new and will fit our baileywick manufactured housing. Another great example. Has its own classification for both AIR and RMS. Some may treat them as frame versus manufactured housing. So that leads to as we think about you know investors often want to do the exercise of stack ranking or comparing the reinsurance strategies of the Florida specialty carriers and you can look at it on a few different metrics whether it be first event retention as a percentage of equity or the cost of the insurance as a percentage of premiums. When we do that exercise, there any things that we should be aware of that make it incomparable to to to what peers report? I I think one important factor for us specifically is because we don't write or we will begin to start to write in South Florida, our average premium is much lower than a lot of our peers. So if you look at it on a percent reinsurance spend to the premium collected, yes, that's going to look a little bit top heavy with us. We make up for it, though, on our attritional experience to get to the combined that we're obviously able to generate. And over time, as we begin writing in South Florida, those average premiums will increase, that will come down a little bit. And certainly, we expect our attritional loss ratio to increase slightly just given South Florida experience. But it's just you're pulling from one lever and you're getting it on the other lever from a reinsurance versus attritional experience. Got it. And so on the reinsurance front we've heard what the carriers are saying or the reinsurers are saying. We hear what the brokers are saying. In your view as a buyer of reinsurance to the extent we do have a benign fingers crossed hurricane season here, do you have a baseline expectation for what you know oneone or I guess the next sixone pricing should look like from a property cat reinsurance perspective? So I can't offer any forward looking here today but I can tell you for everything you've described and we're going know in about forty five days we all know that we're in the peak season here all it takes is one. Yet if it were for some reason void of any sort of hurricanes this year, there's no question in my mind that the rates online would again be adjusted downward next year and I think you would agree with that. Yeah, think both on the traditional reinsurance side as well in the ILS market we'll see softening certainly capacity is becoming more abundant. Now where it really needs the impact to a carrier's reinsurance cost and the ultimate gross premium is a function of the layers below the cat bun. They've still been stubbornly way above 100% in a lot of cases, stubbornly high, causing more companies to form captives, we have one, small one, or higher retentions. So in my view, for me anyway, the bellwether sign is based upon especially in Florida when all of this nonsense of the free roofs on these kitty cats and convective storms that never should have been recoverable are gone now. We're now it'll be three years now reinsurers still are not giving appropriate credit for Florida only for that dynamic. I hope next year, next renewal season begins to see some sort of enjoyment of those dynamics that are just very real. Because on the upper levels, yeah, maybe half point, who knows? But the real magic of reinsurance costs going down is in those And to the extent that we do see reinsurance pricing soften again, for American Integrity specifically, how much of that does fall to the bottom line? And I guess I think of this in the context of what is renewed each year versus multi years it takes to earn in. As we think about next year's projections and 2027 numbers, how quickly does that flow through for you guys? Yes. So the only multi year components of our program are the bonds that we issue, which are typically on either a two or three year basis. We issued our bond this year on a three year term. The bond from last year was on a two year term, just given we were feeling that we were top of the market there. But all of our traditional cover is on a single year basis. So as it relates to that, we see the immediate benefit of any rate action up or down. We can check further Any questions from the audience? Could we get the microphone over here? Thank you. I was just wondering what you would see as a total insured losses for like a one in 100 event in Florida and what your PML would be relative to that? So a total loss on a one in one hundred year event would put us somewhere in the neighborhood of a billion of a of a loss, give or take. And what was the second part of On your gross basis. On a gross basis. Not not a net basis for us, just a gross The whole space, both your lungs, 100,000,000,000 or something. So 2,000,000,000 would be is what we purchased to you. Let's go back. What was Ian Ultimate for the entire state? Was that 40 I think? 40. Yeah. Yeah. Look, without giving you numbers and just trying to be back of the envelope, that wouldn't be appropriate for a conference like this. Here's what I do know. That Ian was the product of two things. Creating severity for the entire event in Florida and also individual companies' performance. Two things. Number one, obviously it was pre reform. Ian happened in September, reform was December. And so the old laws prevailed. Ian also, and so much of this is roof, Ian also we were putting on comp, not composition roofs like with Irma, but tile roofs in Fort Myers about five times the charge. So that's number one. Number two, the dynamic that clearly created a much higher Ian was the fact it was the final run on the bank. Not being retroactive, the nefarious lawyers and roofer's had one last chance and they got it. And so this severity, the overall ultimate cost for Ian, much much much higher. If Ian would happen today, it would be a fraction of the total that it was based upon this perfect storm literally and figuratively, pure reform last hurrah. And by the way, legislators will tell us, because of the ferocity of Ian, is the reason we got these unparalleled, unheard of, once in two generation reforms. Reinsurers don't like to hear this. Yet the price paid in my view, looking at this twenty year journey that we've had in American integrity, more importantly looking at thirty years since Andrew, with this being so unparalleled and historic, Ian created the crucible, the focus for that reform. And like John was mentioning, we love what AI. Here's what's great. I'm old enough where models didn't exist in the nineties before Andrew. So it's great we're arguing, is it accurate? Who's better? Who isn't? We didn't have them back then. But I do know this. It's okay. Actuarial science is such. Rear view mirror. There is still stuff into these models that is a product of this social inflation that in my view, and I hope, future models can begin to take into account. But a long winded question here for you. But if a cat four cat five would replicate like it did with Irma or with Ian, it would be a much lower overall ultimate. I hope that helps. So a follow-up on this topic. To what extent are the reinsurers giving credit for this or not? And how much does it vary from reinsurer to reinsurer is there a difference between Europeans and Bermuda how they look at this issue etc. Great question John I'd like you to take it I will we have our portfolio represented used to have more in Lloyd's than we have today because they've kind of changed their appetite so there is a distinct difference in my view on how Bermuda versus how London has viewed the reform what else could you add to that? Yeah. Hurricane Milton has been the best thing for the industry to point to of a normal event and reinsurers certainly are beginning to give credit because of that event and the lack of the tail of what we've seen previously particularly with Ian and then prior to that Irma. In terms of benefit of it being different geographically, Certainly, you know, London is more challenging right now in Florida just because of where they wanna play in programs, higher in the in the the tower. And we're obviously needing to get diversification up and down the tower. So if you ignore that for a minute, there really isn't a lot of differentiation geographically from different regions of reinsurers and they're pretty much following the herd with F O T's when they're going out and we're seeing we saw that most recently with our 2526 renewal. And holding true to where either whether they're an AIR or an RMS shop. There are several that are very very skilled very skilled at creating their own dynamics and interpretations. Many and most are relying upon those two anchors. So maybe to wrap us up here, I think it's always important to think about this conversation and what it means for ROEs as a very simplistic way to summarize it. You guys are generating great ROEs this year. Think we have you north of 30% ROEs. Typically those type of returns are considered not sustainable. So as we think about the normalization of ROEs, what level should it normalize to? How long does it take to get there? And why does it actually come down? Okay. Great question because we've been earning north of 30% ROEs for several years now, and we're not promising that to investors. We believe that over a full cycle, the ROE that you should earn as an insurance company in Florida is about 15%. And the way you get there is a combined ratio in the high 80 percents or even in the low ninety's can get you to the 15% ROE. That's attributable equally to G and A expense and to loss expenses. They end up kind of falling out about fiftyfifty in that combined ratio. As far as time frame, you you can only see so far into the future. We see blue skies ahead as far as we can see for the next several years. But to be conservative, you know, we guide within our forecast period to revert to those sort of levels. Great and last question, I don't have my weather radar in front of me but anything you guys are tracking right now in The Caribbean or the Atlantic or anything? We All the above. We we watch daily. We've got an on staff meteorologist and when she starts sending emails, start paying a little bit more attention. So But likewise, we follow the same stuff that y'all do. I didn't hear anyone's phone ring during this. Most of the experts are saying of course that we're going to be looking out The Caribbean not so much Africa in these next forty five days so all eyes are on between now and about October 15. And we've got a window here from which we're watching the next five weeks. And so we'll know a lot more come November, but it has been an interesting season. This presentation has now finished. Please check back shortly for the archive.