Mark Hughes: Yeah. Would you say the improvement in the Ian losses, is that AOB and litigated claims as well? Or is that just — well, obviously it’s more information that’s driving it, but do you think it’s the same factors that are working through those storm claims?
Paresh Patel: Yeah. So, Mark, don’t forget Ian was after the first round of reform, but before the second round of reforms. But the bigger thing, I think, was driving the numbers there. It’s a totally different set of things. Mark’s initial number, I think 960 he said, was entirely driven from the models, right? RMSA or all the models that are covered to estimate the losses right after the storm makes landfall. That’s what drove that number. We were already thinking that that number was way overstating for us. And as time has gone on, the actuary and we’ve got more comfortable because of actual developments and actual claims and everything else to reduce the number, because keeping that original model number is just not justified.
And as Mark did say in his comments, we’re still at the top end of the range. Putting it differently also is that the book that we are curating seems to outperform model losses when an actual cat event happens, right? This is pretty big. And we didn’t just miss it by a little bit. We seem to be improving in the models by a huge amount. And we think this is a good thing for future events, yeah?
Mark Hughes: What is at this point your appetite for growth and voluntary policies in Florida? You’re obviously doing well with depop. Are you interested in the green policies out there from a voluntary standpoint?
Paresh Patel: Yes, we are. And I think we actually all through most of this last, Q4 and Q1, we continue to write voluntary policies. But it wasn’t — the volume of that was more than offset and by the depopulations, right? They just become big items and that’s just the nature of it of what happens. So yes, I think we will continue to write new policies. But it’s slightly — it’s small numbers compared to what we did in the depopulations. And we had communicated this because the item that people were looking for — what the state needed, whatever he was talking about, was how do you shrink Citizens? And you have a lot of people there who are looking to leave Citizens. They just needed a better home to go to. And we provided that.
And in all three takeouts we did. We were very careful as to how we curated who we made offers to. But the people we made offers to, 70% plus, took us up on those offers, right? I point this out because I think in the November takeout, when we made offers, we got a 70% acceptance rate. Everybody else who was participating in that takeout, their combined acceptance rate was probably around under 30%.
Mark Hughes: Yeah. And could you expand on that? Why do you think that is? Is your premium any different than the others or just the size, the brand? What’s driving that?
Paresh Patel: I think it’s all of the above, right? You have to bring multiple things to the table. Track record, make sure you make a compelling proposition to the policyholder that they should come with us. We have long-corded agents, and we should give a shout out to them. Almost universally, all the policies we selected, the agents who are actively telling the policyholders, this is a better place for you to go to. If I could have put you there in the first place, I would have. So take the offer. So these are all individual little items that all come together that work well. The other side of things also, in all three takeouts, we actually made fewer offers than we were approved for by the OIR. And we did some of that because unless we think the policyholder is going to be happy with us long-term, we tend not to make the offer, right?
We want people to join the HCI family who want to be with the HCI family. You’re seeing all the combinations of all of these things coming together in the right way, yeah?
Mark Hughes: Yeah, yeah. Okay. Mark, given the timing on the takeouts in the first quarter and the magnitude, any thoughts about kind of earned premium contribution in Q1? I think when we get into Q2, might be a little more straightforward exercise, but just given the pacing of things, I wonder if you can provide any guidance on that.
Mark Harmsworth: Yeah. So I think Karin and I both mentioned $273 million of premium in-force, and that’s three takeouts. One in November, one in December, one in January. So I’ll just focus on the ones in 2023 first. We booked $23 million of earned premium in Q4. And if you look at the timing of the assumptions that were done in ’23 and in ’24, earned premium in Q1 would be closer to $60 million to $62 million instead of the $23 million that we have. And then a little bit higher than that in Q2.
Mark Hughes: Yeah. And then the January takeout.
Mark Harmsworth: I sort of shifted gears halfway through there, Mark. I apologize. I included both of them. So they’re in Q — so in Q1, there should be about $40 million more earned premium from those takeouts than there was in Q4. And then there’ll be a little bit more a little bit more again in Q2, because one of those assumptions was toward the end of January. Does that make sense? Does that answer the question?
Mark Hughes: Yeah, that’s perfect. Thank you. And then, I think the question might have been asked earlier and if you answered it, I’m not sure they picked it up. But did you give a kind of a sense of the bottom line contributions from the takeouts if it was $23 million in premium? Do you have a number for the bottom line contribution?
Mark Harmsworth: It’s about $14 million. And of course, that number will be significantly higher in Q1.
