Trean Insurance Group, Inc.

Greetings and welcome to Treon Insurance Group's first quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn this conference over to your host, Mr. Garrett Edson from ICR. Thank you, sir. You may begin.

Thank you, operator. Good afternoon and welcome to Treon Insurance Group's first quarter 2021 earnings call. This afternoon, the company released its financial results for the quarter ended March 31st, 2021. Press release is available in the investor relations section of the company's website at www.treon.com. I would like to remind everyone that certain statements made in the course of this call are not based on historical information and may constitute forward-looking statements. Statements are based on management's current expectations and beliefs and are subject to a number of trends and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. I refer you to the company's filings made with the SEC for a more detailed discussion of the risks and factors that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today. The company undertakes no duty to update any forward-looking statements that may be made during the course of the Additionally, certain non-GAAP financial measures will be discussed on this conference call. Our presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. Reconciliations of these non-GAAP financial measures to the most comparable measures prepared in accordance with GAAP can be accessed through our filings with the SEC at www.sec.gov. Joining me on the call today are Andrew O'Brien, the company's president and chief executive officer, and Julie Barron, the company's chief financial officer. With that, I am now going to turn the call over to Andy.

Thank you, Garrett, and welcome to our first quarter 2021 earnings call. We appreciate your participation on our call and for your continued interest in TRIAD. On today's call, I will walk through our higher-level results and update you on the great progress we're making with respect to our overall strategy. Julie will follow and provide some detail about our first quarter results, and then we'll open it up to Q&A. Our first quarter was a great follow-through to where we left off at the end of 2020. We generated excellent year-over-year premium growth in the first quarter in all facets, gross written, gross earned, and net earned premium, and continued to deliver on solid underwriting. As a result, we remain well-positioned to grow rapidly and profitably as we move through the balance of the year. During the first quarter, we grew gross written premiums by 36% year-over-year to a record $146.7 million, another excellent performance generated through multiple sources, including our new program partners and organic growth. Our net earned premium increased 83% to $41.1 million, compared to $22.5 million in the first quarter of 2020. Our loss ratio fell within our recent historical first quarter range of between 57 to 61%, and we improved our combined ratio on a year-over-year basis. And we generated a just net income after excluding non-recurring other expenses and significant non-cash items of $8 million, or 16 cents per diluted share, producing adjusted ROTE of 16.4%. Along with our solid first quarter results, we continue to make very strong progress in terms of rapidly expanding the market share of our non-workers' comp programs. In the first quarter, our non-workers' comp liability lines grew gross written premiums by 157% year over year. representing over 32% of our total gross written premiums for the first quarter. Workers' Comp continues to form the majority of our premiums, and we saw another quarter of double-digit growth in gross written premiums in that line of business. Beyond that, we are successfully executing on diversifying our business and further reducing our overall concentration risk. In addition to our 36% growth in gross written premiums, I also wanted to highlight that we generated additional gross unearned premiums of $18 million in the first quarter of 2021. As of March 31, 2021, we had net unearned premiums reflected on our balance sheet of $66.2 million, an increase of $16.1 million compared to December 31, 2020. Assuming our loss ratios and other operating expenses remain stable, This significant net unearned premium represents deferred future profit to be recognized over subsequent quarters as these net premiums are earned. We are very pleased with this kind of growth. We also continue to retain more premium on our books, which allowed us to drive our retention above 32% this past quarter. As we noted on our prior call, we have also started to accelerate our investments in automation, technology, workforce additions, and other areas in order to support our program partners and further provide a superior competitive and value proposition to existing and prospective customers. For instance, we are currently planning the implementation of a new claim system which should optimize our processes and further ensure timely handling of claims. In addition, our automation initiatives will benefit us by streamlining and improving systems and processes throughout the company to ultimately create long-lasting and meaningful expense savings. While G&A dollars will remain elevated in 2021 as a result of these investments, they ensure that we will be able to expand our market share and generate sustainable and profitable growth in the years to come. Looking into the balance of 2021, our powerful business model continues to be validated and our overall strategy and ability to successfully execute remains unchanged. We will continue pursuing organic growth within our existing markets to further increase our gross written premiums. We will retain more quality net earn premium, which should further enhance our bottom line moving forward. And we will selectively and responsibly add new program partners, in particular those that target specific niche programs with a clear competitive edge. Our entire team's constant hard work and dedication continues to pay off. We appreciate all of their efforts and remain very excited for our future. With that, I'll now turn the call over to Julie.