Trean Insurance Group, Inc.

Good afternoon, everyone, and welcome to the Treon Insurance Group Inc. second quarter 2021 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one. Please note that this event is being recorded. I would now like to turn the conference over to Garrett Edson of IRC, or ICR. Please go ahead, sir.

Thank you, Arbiter. Good afternoon and welcome to Treon Insurance Group's second quarter 2021 earnings call. This afternoon, the company released its financial results for the quarter ends June 30th, 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 the call are not based on historical information and may constitute forward-looking statements. These 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 findings 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 this call. 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 Chief Executive Officer. Julie Barron, the company's President and Chief Operating Officer, and Nick Vassallo, the company's Chief Financial Officer. With that, I'm now going to turn the call over to Andy.

Thank you, Garrett. We welcome everyone to our second quarter 2021 earnings call. We appreciate your participation on this call and your continued support and confidence in Treon. We had a strong second quarter and recorded the best gross rate and premium growth in our company's history for the first six months of the year. Further, we are making significant progress in all of the areas most important in delivering long-term value for our shareholders. Nick will be along shortly to provide details on our second quarter performance. One year ago in July, we completed our initial public offering. I think this is an appropriate time to remind you of what we've accomplished, where we see ourselves in the years to come in terms of our company and driving shareholder value and how we plan to get there. First, it's important to state this right now. As you can clearly see from our results over the past six years, Treon is firmly a growth company. We followed up on our 36% gross written premium growth in the first quarter of 2021 with 43% year-over-year growth in the second quarter, translating to 40% growth for the first half of 2021. We've been able to generate these growth figures because we developed a unique business model. We work with owned and third party program partners that focus on workers comp and other underserved segments of the specialty insurance market. Our partners are deeply vetted. We develop longterm relationships with them. We have a first class management team and with that combination of our model and our team, we are able to take advantage of the large opportunities set in front of us. Importantly, We are achieving our rapid top-line growth while we continue to responsibly manage our risk through risk sharing, collateral management, and appropriate reserving. Disciplined underwriting is critical to our long-term success, and our approach to underwriting and risk management will not change. We're proud of our success and what we've built at Triad. And now it's time to set new goals, ambitious goals, but ones we are confident we can achieve. Our long-term goal is to generate $1 billion in annual gross written premiums within the next five years. We will accomplish this the same way we've grown so rapidly, building and maintaining long-term relationships with exceptional program partners. We think this goal is achievable for several reasons. One, we operate in a huge and rapidly growing portion of the insurance market. Even hitting our long-term goal of $1 billion in gross written premium, we will still own a very small share of the overall market. The opportunity is clearly present. We project that we can generate at least solid high single-digit to low double-digit growth per year within our existing program. And we expect that we would add three to five new programs per year to supplement our current programs. In order to hit our target of $1 billion in annual gross written premiums, we need to grow in the low teens per year. While that growth will fluctuate on a quarter-to-quarter basis, we don't run our business by the quarter. We focus on our annual performance and our long-term trajectory. And as you can see from our historical results, we grew nearly 30% annually from 2015 to 2019. And last year, we grew 18% despite the pandemic. We have the clear track record of success that makes us confident that we will reach our target. But we aren't just focused on the top line. At the end of the day, our top line growth has to translate into profits. Now, rapid growth such as we are having now will impact current earnings as we recognize upfront costs that are ultimately recovered as unearned premiums are realized. but how we evaluate our overall progress or our true north is simple. We look to our annualized growth and the stability of our annualized loss ratio. If we are growing to plan and our loss ratio remains stable, we will be in solid shape, and as the premiums become earned, they will eventually flow to our bottom line. To that end, we look at the growth in our gross unearned premiums, the place where our deferred earnings accumulate, as one of the key measures of our long-term success. For the first half of 2021, we have been spot on our true north. We're confident in our growth efforts for the remainder of 2021 and our longer-term strategy because we have a successful record that validates our approach. By growing organically, prudently adding new programs, and retaining more of our gross premiums, we continue to put ourselves in prime position to prosper, and deliver long-term value for our shareholders. Our 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 Nick.