Question-and-Answer Session
Operator
Our first question comes from Joe DeMarino with Piper Jaffray.
Joe DeMarino - Piper Jaffray
Thank you. Good afternoon or good morning. My first question, correct me if I’m wrong, but I’m looking at your balance sheet and your net loss reserves, and it looks like year-over-year your net loss reserves are fairly flat, but when I look at your net or your new risk written, it looks like it’s up some 8% year-over-year. So my question is, in a soft market that we’re in here, you’re adding additional risk, yet your reserves it seems year-over-year are flat; is anything I missing here, correct me if I’m wrong I guess, but?
Steven English
Yes. I think what you are perhaps missing is the fact that 2008 we had significant property CAT claims that we’re settling, and those are running off this year.
Joe DeMarino - Piper Jaffray
Okay, anything else?
Steven English
I don’t think there is anything else unusual in those trends.
Joe DeMarino - Piper Jaffray
Okay, and I guess moving on here, to the commercial aspect or commercial side, you maybe already said this, but what does your premium per exposure look like in the commercial side; is that a rate flat per exposure or are they down still?
Bob Restrepo
Pricing, overall is flat, it’s up 0.1%. It varies somewhat by line. Pricing is still down somewhat in commercial automobile, pretty flat in workers compensation and we’re beginning to get price increases on a total quarter basis. Its not reflective in our results yet, but going forward we’re getting price increases in the low single digit range for our property liability and prop classes, again using our new predictive modeling technology.
Joe DeMarino - Piper Jaffray
Okay, do you see the declining exposures bottoming soon?
Bob Restrepo
No. It may bottom in the next couple of quarters, but for the past couple of quarters we’ve been in a net deficit position in terms of our premium audit returns and we settled those up 12 months after the inception data of the policy.
So as I indicated in my prepared remarks though, we’re a lagging indicator. So even if the economy turns around or stabilizes, its going to take several quarters for us to fully reflect that in our renewal premium basis, as well as in our audit results, so we continue to see negative effect on our premium basis and on our top line commercial lines for several more quarters.
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