Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from the line of Beth Malone – KeyBanc
Beth Malone – KeyBanc
The guidance that you’re giving, its $0.80 to $0.90 for 2009, correct?
Robert Cubbin
That’s correct, operating earnings that includes the amortization expense.
Beth Malone – KeyBanc
And excluding amortization it would be $0.90 to $1.00, is that what you’re saying?
Robert Cubbin
That’s correct.
Beth Malone – KeyBanc
It sounds like pricing is a major factor for what you’re looking for in 2009, and I’m curious when you look, do you see further deterioration or unexpected deterioration in pricing on the book of the ProCentury’s book once you close the transaction? Has the trend deteriorated since the time you agreed to purchase back in February to when the closed quarter?
Robert Cubbin
The pricing has deteriorated somewhat and as I said their rates are down around 6% overall, but on the liability side they’re still seeing some increase in prices in certain segments of their business. Property is up a little bit but overall they’re down and that’s pretty consistent throughout the year.
Beth Malone – KeyBanc
Is there an opportunity to offset some of that pricing pressure with new, expansion into new markets, there’s a lot of cross selling at the quarter, but there’s seem to be a lot of opportunity for cross selling into new markets, do you see that being an offset to the some of the price decreases?
Robert Cubbin
We’re seeing some fairly significant opportunities to increase the footprint of Century in New England as I mentioned, we already have them up and running with our wholesale partners. Here in the Mid West we have a new wholesale operation that didn’t exist for ProCentury before so we are going to see some growth in the Century business.
We’ve also gotten them licensed admitted markets now. Their garage, ocean marine and surety markets that they didn’t have before. So we are expecting to see 2009, an uptick in their buying as a result of the merger.
Operator
Your next question comes from the line of Analyst – RBC Capital Markets
Analyst – RBC Capital Markets
Given the merger with ProCentury which has slightly a different book and different risk profile and also maybe the rumblings of firmer markets in reinsurance particularly on the property side, have you shaped up how you’re going to approach your reinsurers and how much you might want to retain in 2009? Is it still going to be in the low 80s or are you going to retain a little more, little less or are you just going to wait and see?
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