Heritage Insurance Holdings, Inc.

Good morning and welcome to the Heritage Insurance Holdings Third Quarter 2020 Financial Results Conference Call. My name is Cole and I will be the operator for today. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. Please note this event is being recorded. I would now like to turn the conference over to Arash Soleimani, Executive Vice President at Heritage. Please go ahead.

Good morning and thanks for joining us today. we invite you to visit the investor section of our website, investors.heritagepci.com, where the earnings release and our earnings call will be archived. These materials are available for replay or review at your convenience. Today's call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. In our earnings press release and in our SEC filings, we detail material risks that may cause our future results to differ from our expectations. Our statements are as of today, and we have no obligation to update any forward-looking statements we may make. For a description of the forward-looking statements and risks that could cause our results to differ materially from those described in the forward-looking statements, please refer to our annual report on Form 10-K, earnings release, and other SEC filings. With us on the call today are Bruce Lucas, our Chairman and Chief Executive Officer, and Kirk Lusk, our Chief Financial Officer. I will now turn the call over to Bruce.

Thank you, Arash. I would like to welcome all of you to our third quarter 2020 earnings call. Before we begin the call, I'd like to thank all our employees for their dedication to our company. The third quarter was challenging only because we experienced record catastrophe losses related to Hurricane Isaias and Sally, in addition to elevated non-cat weather losses. Despite elevated weather losses, the core fundamentals of the company continue to improve year over year and quarter over quarter. Over the past year, I've commented that new business has and will continue to accelerate as we launch new states, new partnerships, and develop additional revenue channels in our existing states. This trend has been remarkably strong and has continued in the third quarter as new business sales set a fifth consecutive quarterly record and gross premiums written increased 17% year over year. During the quarter, we launched operations in Delaware and anticipate launching Maryland in the fourth quarter, which will add additional revenue growth in 2021. I've been very focused on growing our national partnerships, which I believe sets us apart from our peers and will continue to add to our record growth. There are several more partnerships and expansions of existing partnerships that I believe will be announced in the near future. This is truly an exciting time for the company, and I don't see any material impediments to our growth for the foreseeable future. Equally important is that our loss reserves continue to develop favorably. The third quarter marks the ninth consecutive quarter of favorable reserve development. This is an incredible achievement given recent market conditions and is a testament to our conservative approach toward loss reserves. Our increasing sales and favorable reserve development have resulted in meaningful gains to our book value per share, which had solid growth year over year despite the weather losses in the third quarter. Additionally, the employment contracts for me, our President Richard Whitacombe, and our Chief Operating Officer Ernie Garite expire on November 4th. The Board of Directors offered new contracts for all of us that I believe are fair and strike an appropriate balance for shareholders. After a lot of consideration, I have decided to retire from Heritage by the end of November and promote Ernie Garrett to Chief Executive Officer. Ernie has been an integral part of Heritage's executive team since the company's inception and has tremendous experience across product management, underwriting, claims, analytics, and systems. As a founder of the company, it was important for me to pick the next CEO, and I'm pleased to name Ernie as my successor. Our co-founder, Richard Whitacombe, will continue to serve as president and chairman of the board. Even though I'm retiring from Heritage, I'll continue to serve the company as an executive consultant through 2021, and shareholders should expect a seamless transition. New agreements reflecting these changes will be filed as soon as they are completed, and I am confident that our executive compensation expenses will be significantly lower in 2021 and will provide a meaningful boost to our earnings per share. As many of you know, I'm a serial entrepreneur and love the challenge of creating new companies from the ground up. I have started several companies over the years, with Heritage being my most successful venture to date. It was important to me to stay with the company until the business plan I developed was fully implemented. Since inception, we grew from a single-state homeowners insurer in Florida to a top-20 homeowner writer in the United States that's actively writing in 15 states with over a billion of in-force premiums. We have developed an impressive double-digit organic growth engine, including a vast independent agency network and multiple national partnerships with some of the top insurance companies in the U.S. Over the past five years or so, we've de-risked roughly $23 billion of Tri-County Florida TIV, diversified the company's footprint, and reduced Florida TIV from 100% of the total company to just 31%. Our in-force premiums have nearly doubled and are growing at record levels. Our reserving has significantly improved and is arguably the strongest in the peer group as demonstrated by our ninth consecutive quarter of favorable prior year reserve development. We've been profitable every full year of our existence, even during the toughest periods of the assignment of benefits crisis in Florida and through extremely active storm years, which is the exception among our peers. Since inception, we've grown book value at an impressive 22% compounded annual growth rate, and we've returned almost $150 million to shareholders through dividends and share repurchases. Our new business sales have set new records each of the past five quarters and are up over 100% year over year. I am extremely proud of our operating results during my tenure as CEO, and the timing of my retirement felt right. as I believe we successfully navigated through some very difficult times, established ourselves as a meaningful competitor in the property insurance sector, and are in a position of strength relative to our peers. I trust Ernie's judgment and ability to execute a very successful business plan, and I look forward to supporting Ernie as he makes a seamless transition to his new role. I'd like to close by thanking our employees, directors, partners, and shareholders for their support over the past eight years. I did not build this company alone. It was a team effort and I am forever grateful for your contributions to our company. Thank you for all the amazing memories and for making Heritage a best-in-class company. I will now turn the call over to Kirk to provide more details on our financials.