Question-and-Answer Session
Operator
(Operator Instructions) Our first question comes from Bijan Moazami – FBR Capital Markets.
Bijan Moazami – FBR Capital Markets
I have a number of questions and it will be regard to ProCentury and what you saw after the merger. In particular did you see any kind of reserve adjustment to the pre-2002 liabilities of ProCentury?
Robert Cubbin
No. Most of the reserve adjustments are from the ’05 and ’06 accident years, and maybe a little bit of ’07.
Bijan Moazami – FBR Capital Markets
And you alluded a little bit to opening up new offices getting new agents. Can you be a little bit more particular in terms of how much cross selling you predict or you see so far with the acquisition of ProCentury?
Robert Cubbin
While it’s been a little bit more modest at this point, what we see is the opening up of those markets so we’re going to see substantial growth in 2009, Bijan. So in the fourth quarter we saw a little bit it’s going to be less than $7 or $8 million but going forward it should be very, very substantial into ’09 because that’s really just the beginning of what we’re seeing is getting those markets opened up.
Bijan Moazami – FBR Capital Markets
In terms of how the company expenses, how much cost cutting have you been able to achieve in terms of auditors fee and accountant fee and stuff like that.
Robert Cubbin
Well, in the first year of the merger we really didn’t expect to see a whole lot of decrease in that. We were only combined for five months and as our auditors for the first time also were auditing Century, I think that in general the audit fees were probably up from where they were last year. But going forward, we should see some decreases in that as we create more efficiency.
On the public company side, again, we only had five months to combine and we really were expecting an increase in some of the expenses as we take on some of the severance and the restructuring that we had to incur in order to get a more efficient platform going forward. So we’ll see more of that savings during 2009, but I would say in general it’s pretty much in line with what we expected maybe it will be a little better.
Reassurance costs, I think, have come down a little bit as we’ve been able to combine some our treaties. But the real meaningful part of the ProCentury Meadowbrook merger was the growth opportunity. And as you can see from our projections for 2009, we have very, very substantial growth built into that over 135 million of new business. So we’re really looking more towards expanding and growing the opportunity as opposed to wringing out every last dollar of expense.
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