Mark Hughes : Yes. And when you’re talking about the, success you’re having with the citizens takeout, I think you said the renewals are coming in better than expected. Your pricing generally, you’re able to offer pricing that’s in line or less for renewal was there another aspect of that again, as you were describing the success you have had with the citizens takeouts, was that covering the benefits or the better experience?
Karin Coleman : The other item is the loss ratio on the business we’ve assumed is better than we anticipated.
Mark Hughes: Yes. That was it.
Mark Harmsworth: You’ve added that $250 million of premium with almost no added expenses.
Operator: Your next question is coming from Matt Carletti with Citizens JMP.
Matt Carletti: Thanks. Good afternoon. Paresh, when you talk about looking forward and opportunities to double, triple the size of the company, as you kind of hit those milestones, how do you view HCI kind of being similar or different? And I guess where I’m going with this is more geography than anything else. Do you — how much opportunity you consider continue to see in Florida? Is there a certain market share at which you feel like you’ve got enough of the market? Where do you kind of see Florida growing in lockstep with the rest of the country and not changing much you disguise being bigger?
Paresh Patel: Matt, speaking just geography wise, right?
Matt Carletti: Yes.
Paresh Patel: When we talk about the $150 billion probably about $20 billion is in Florida. Plenty of room to grow there. That’s obviously right in our backyard and that opportunity is there. In the rest of the country, the other $130 billion big chunk of it in Texas, chunk of it in California, et cetera. All of these markets are going through their stress. Just read any of the industry press and you’ll see it. I think all of those markets will eventually stabilize out at much higher numbers and at some point there will be an opportunity. How quickly that takes, we can be patient to when it actually happens. We’re just setting ourselves up. We’re not handicapping as to when California will become an opportunity or when Oklahoma will become an opportunity. We’re just sitting here patiently waiting. But when they do become an opportunity is when we will jump in.
Matt Carletti: How do you think about? You talked a bit in your comments and in the press release about the leverage that the technology provides. How do you think about you become, say, twice the size or three times the size? Like is there a certain expense ratio you believe you can operate or a certain spread better than kind of what the market is?
Paresh Patel: Matt, I think we think of it in a slightly different context, but just too sort of put this. If you imagine that the first billion and these are the numbers. When we write the second billion losses will go up proportionately because you double the business, you might end up with a similar number. Agent commissions will probably double up as well. But all the other corporate overhead, other expenses those will not double up. They will increase somewhat, but it’s very easy to see that they will not double up. That’s where I think the leverage increases. There will be some additional expense because it won’t be zero, but it’s we just added $280 million of premium, almost $300 million of premium and we’ve hardly had any dollar increase in operating expenses. That’s where that leverage is coming from. The automation is just beginning.
Matt Carletti: And then if I could just a couple, I guess one numbers question. One maybe numbers. You mentioned Q1 had a little weather to it, and that’s maybe why you’re like a point or fraction of a point higher on course loss ratio. I know it’s only about halfway through the quarter, but any early insights on Q2? Is it looking normal, looking active, just from what you guys see?
Mark Harmsworth : No. So far it looks, it looks pretty normal. Nothing unusual at this point in April.
Matt Carletti: Okay. Great. And the last one, just numbers. Do you have net written premiums consolidated handy?
Mark Harmsworth : Yes. $187 million.
Paresh Patel : Hey, Matt, building up on a question from before. The other thing by the way, and this is why I’m so excited in my, what I was saying in my prepared remarks. We’ve long talked about technology and personal lines and Homeowners policies and that kind of thing. The interesting thing is in getting core up and running, we suddenly realize how much of our technology platform, right, speeds up time to market of a new line of business. Commercial residential is different to residential. And it has opened our eyes that this platform can be used not only in different geographies but also in different lines of business. You can go from residential to commercial, residential to why not go to commercial, et cetera. I’m not saying we’re doing that today, but we are certainly looking at this platform could be used in lots of ways that we’ve never used it before.
Because once it’s successful, you can just add onto it. So that’s what is creating that opportunity about maybe doubling or tripling there is more here than just writing more policies.
Matt Carletti : Yes. No, that makes a lot of sense. Well, thank you and congrats on a really nice start to the year.
Operator: Your next question is coming from Michael Phillips again with Oppenheimer.
Michael Phillips : One more. Thanks. Let me back in. Kind of a follow up to Mark your comments about litigation propensity down around 35%. Can you remind us what, how are you handling your prior year of loss picks and reserves given what you’re seeing there for that propensity to come down?
Mark Harmsworth : Yes, that’s a good question. I mean, for all of the accident quarters, prior we’ve made assumptions about what we think the ultimate cost of loss costs would be for any of those accident quarters. And that includes assumptions that we’ve made for the number of lawsuits that we will ultimately get. And so, I mean, literally every quarter, we’re updating that estimate of how many lawsuits we’ll ultimately get. And what I would say is that things are developing for the older accident quarters prior to the legislative changes, things are developing pretty much as we expected them to be. Nothing unusual, we didn’t have any adverse development in the — we didn’t have any adverse development at all in the first quarter.
For the accident quarters after the legislative changes, we’re still being — we made selections that took into account the changes in legislation. We’re still evaluating those as to whether we should potentially bring them down a little bit. But we haven’t really done much of that yet. I mean, we’ll have to — we need a little bit more time to go by. So, the way those accident quarters are developing is, we’ve got about 35% fewer lawsuits than we would have gotten in the old world, if you will, or in the old rules. But we haven’t reserved quite that optimistically, if that makes sense.
