Question-and-Answer Session
Operator
(Operator instructions) Your first question comes from David Lewis from Raymond James. Your line is open.
David Lewis – Raymond James
Thank you, and good morning.
John Byers
Good morning, David.
David Lewis – Raymond James
Congratulations on another solid quarter.
John Byers
Thank you.
David Lewis – Raymond James
Bob, I got a couple questions to start for you. Has there been any competitive changes in the Florida market worth noting during 2008?
Bob White
David, really nothing's changed since our first quarter call. And the only change that we reported in the first quarter call was the increased activity on the part of AIG that we noticed. That continues in the second quarter. But we are holding our own against the competitive pressure they've created, and we're quite satisfied with our retention in results on new business.
David Lewis – Raymond James
And Bob, remind me on that – are they starting to focus on some of the smaller specialty groups? They've always been heavy on the hospital groups, but are they kind of going down in size?
Bob White
Well, I think you have to bear in mind that the per-unit cost of insurance in Florida is a lot higher than it is in most other states. And their focus in Florida is on groups that are smaller in size than they might be in another state. Because the smaller groups still generate in Florida a higher premium volume for them. So we tend to see them willing to compete on groups of 10 or more in Florida, where might be a lot higher in another state.
David Lewis – Raymond James
Okay, that's helpful. And Bob, there was an article which you were quoted in this past week, talking about the large number of doctors that are bear in Florida, and that this clearly hurts patients' ability to sue these doctors. Are there any moves from the Florida legislature to force docs to buy minimum coverages?
Bob White
Well, the question of mandatory insurance keeps popping up. But it's an oversimplified fix, because the issue of mandatory insurance is linked in our minds to solving the problem with reimbursement levels for doctor services from governmental sources and third-party payers. And without addressing that issue, mandating mandatory insurance for physicians could have unintended consequences by driving out physicians who simply can't pay. They would either quit practicing or leave the state. And that could overburden the physicians who remain and could create consequences for our company by impacting our business and eroding our profitability. Because overburdened physicians tend to create more claims than physicians who are working with inadequate supply. So it would be easy for us to say we support mandatory insurance, because at least on the surface it appears as if it would benefit our business. But we feel the issue is far more complex than it appears. And absent steps to address physician reimbursements, which would increase the doctor's ability to purchase insurance, we can't support that solution. So it keeps popping up every year or so, but it really doesn't have much support in the legislature, and we don't think there'll be anything in the near-term that would change that.
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