Powell Brown: Yes, repeat the first part of that question. You were breaking up or I didn’t hear it exactly.
Meyer Shields: Okay. I just want to confirm that there were no losses in the layer of reinsurance that you funded for captive. The reason I’m asking is because we did see some significant storm losses that impacted the lender-placed market.
Andy Watts: No. No, there isn’t. But keep in mind the captives that we have are not — they’re not linked with our lender-placed business. They’re on large condominiums as well as on the quake side. So, wind and quake in there. And no, we did not have any storm-related claim cost in the first quarter.
Meyer Shields: Okay. Perfect. Thanks so much for the clarification.
Operator: Your next question is from the line of Mark Hughes from Truist Companies. Your line is open.
Mark Hughes: Yeah. Thank you. Good morning. Powell, I wanted to be a little more optimistic around capacity, the capacity for our programs. And I wonder I think last quarter you had suggested that might be a — something you’d be keeping an eye on and that would be potentially a gating factor for organic. Have you seen that change over the last three months?
Powell Brown: No. I don’t want to give you the impression that there’s some like found new capacity. I wish we could say that. But I think the issue is this every carrier or market participant is evaluating how they want to deploy their capacity. As I said earlier carriers are looking for more protection against earnings volatility nothing new. They’re looking for balance of risk to the extent possible where we have a very large group of programs that are not just CAT. So we’re able to balance those with people and so that’s a very positive and we’ve had really good results over a long period of time. So we feel like as I’ve said before that we are effectively an outsourced insurance company. We can do everything other than bear the risk.
And as a result of that and the results that we have delivered if in fact someone is considering, expanding or repositioning, which is a better thing. I don’t think of it as expanding but repositioning capacity then we typically like to think that we’re going to be near the top of that list because they’ve seen our results and they’ve seen the growth that we’ve had in the past. So there’s no found bucket of gold under the rainbow. It’s not that kind of deal. But I do feel like there’s some really good discussions around us being able to keep capacity, which is as equally as important. I view that as a win Mark not just cutting capacity, because a lot of people have had a lot of capacity cuts. And if we can keep our capacity that to wind and then we might get cut a little bit somewhere but we get a little new.
And so on a net basis, we’re about even or maybe up just slightly.
Mark Hughes: Thank you for that. And then you mentioned that Florida construction sounds like its good. How about nationally?
Powell Brown: Yeah. What I would tell you Mark is, if we go around the system and you look in places, it’s remarkable. I mean places that come to mind I’ll give you an example Nashville, Tennessee, Atlanta. You get up in the Northeast in several areas, Boston. You get in Colorado. I mean, Phoenix. You get in all these places all around and you just got a lot going. And so if you think about it, the industry — the one industry that we’re in that has got a headwind as a higher level in a specialty lines business is auto dealers. We do some auto dealer work and auto dealer units are down. So think about it. Their pricing is coming back down to MSRP levels or below. There’s an impact on used cars. And so that’s a direct relation to our interest rate increases.
So having said that at some point that’s going to turn as well. So that’s a slight headwind in our — but if you think about other industries there’s a lot of businesses that are looking for people. I think the restaurant business is tough particularly anything that is not defined as seated. It doesn’t have to be fine dining but like a nicer restaurant, they’re having a hard time in terms of getting people to work because if it’s fast food, it’s just tough.
Mark Hughes: Yeah, yeah. And then one final question. Andy I don’t know if you gave the revenue impacts from the winter storm claims?
Andy Watts: No, we didn’t break it out but we did mention it Mark in the commentary on services. And yeah we did pick up some claims from the winter storms, again nothing really, really material in there but a few.
Mark Hughes: Okay, great. Thank you.
Andy Watts: Yeah. And just for clarity those sit in services, okay?
Mark Hughes: Yeah, understood. All right.
Operator: Your next question is from the line of Elyse Greenspan from Wells Fargo. Your line is open.
Andy Watts: Hello, Elyse.
Elyse Greenspan : Hi. Sorry, I was on mute. Thanks for taking me back. I just had a follow-up question. So, just thinking through some of the stuff that came up earlier in the call in terms of just the captive and Ian revenue and the margin. So I know you said the captive isn’t 100% margin. So if I assume Ian and the captive right, which I think was $18 million revenue is 75% margin and I adjust the overall margin for that, and I add back the 40 basis point headwind from GRP, I still get that you’re about a 35.4% margin for the quarter. So will it still would have been down a little bit year-over-year right? And you did have the NII tailwind. What am I missing, I guess, in thinking about this math and then tying it back to your guide for margin improvement over the balance of the year?
Andy Watts: Hi, Elyse. So I think maybe a couple of things to think about and we mentioned in the comments is there are some moving parts in there. We thought it was easier just to give everybody guidance on the full year, right? Because otherwise there’s always puts and takes. There’s business mix inside everything else. It’s just — it’s not as easy as just adding up a couple of items. So what we’re trying to do is just keep it relatively simple for everybody and give an idea as to what the full year would look like for the organization.
Elyse Greenspan: Okay. And then when thinking from here, I guess, the only, I guess, one-off items embedded within the updated full year guide is just right programs will be some stronger revenue from the captive right until we kind of annualize that later in the year. So that could help margins, I guess, in the second quarter and then also just the higher investment income. Are there any other like headwinds or tailwinds in that updated full year guide for the rest of the three quarters?
Andy Watts: Well, so I think in the second quarter, yes, I think your comment would be fair. Now keep in mind that the revenue from the captives, right, will start to level out. So we’re not going to get the benefit of organic lift each quarter going forward like what we saw in the first quarter, okay? Because we’ll be — we’re writing basically a specific amount of premium, right, is what we committed to do inside of the captive. So that’s limited in nature. That’s why you get basically to a level amount of revenue by the back end of the year. Keep in mind also, we mentioned the one-time bonus in programs that we had in the fourth quarter of last year and also the $8 million of Ian claims. Just take those into consideration, when you’re thinking about organic in the back end of the year and what that might mean on margins.
