Question-and-Answer Session
Operator
(Operator Instructions) Our first question comes from the line of Bijan Moazami with Friedman, Billings, and Ramsey. Please proceed with your question.
Bijan Moazami - Friedman Billings Ramsey
Good Morning everyone. The premium volume suggestions you have for 2008, indicates 11% to 14% growth rate, which is a very good growth rate, but somewhat lower than what you guys were talking about in the third quarter. Could you explain why you have decreased those numbers, I know, you have alluded to the market conditions and there is a pricing decline, but has it really anything changed over the past three months that it is leading you to decrease those estimates going forward?
Bob Cubbin
Yes, good Morning, Bijan. Yeah, the growth rate for '08 is really based upon what we have seen in the last 90 days or so, because that is slightly slower implementation rate on the new business than we had previously anticipated. But we do expect to see that increase as we get into 2008.
If market conditions do sort of flatten out, as opposed to continue to deteriorate from a pricing standpoint, then we may see appropriate growth rate. But based upon all the times that we have seen in the last 90 and 120 days, we think it is more prudent to target those lower growth premium targets, even though we do expect to see earnings at the same range as what we previously announced.
Bijan Moazami - Friedman Billings Ramsey
So, it is safe to assume that you also believing that the loss ratio in this book of business is somewhat better than what it has been producing historically, Right?
Bob Cubbin
Yes, we have seen the decrease in frequency. And both on our claims and incurred basis, we have been experiencing better than anticipated results, which is then reflected in the reduction in prior accident year reserve alternates. So, yes, we do see the loss adjustment expense ratio performing better than expected. And we also, as you'll recall, we eliminated the fronting fee in the latter half of last year. So, we'll start to get the full benefit of that in '08. So that does improve the overall combined ratio as well.
Bijan Moazami - Friedman Billings Ramsey
Thank you.
Bob Cubbin
Thank you.
Operator
Our next question comes from the line of Beth Malone with Keybanc Capital Markets. Please proceed with your question.
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