Image source: The Motley Fool.
HCI Group Inc (HCI 1.35%)
Q4Â 2018 Earnings Conference Call
March 07, 2019, 4:45 p.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
See all our earnings call transcripts.
Prepared Remarks:
Operator
Good afternoon. And welcome to the HCI Group, Inc. Fourth Quarter and Full Year 2018 Earnings Call. My name is Tom, and I'll be your conference operator this afternoon. At this time, all participants are in a listen-only mode.
Before we begin today's call, I'd like to remind everyone that this conference call is being recorded and will be available for replay through April 7, 2019, starting later this evening. The call is also being broadcast live via webcast and available via webcast replay until April 7, 2019, on the Investor Information section of HCI Group's website at www.hcigroup.com.
I would now like to turn the call over to Kevin Mitchell, HCI's Senior Vice President of Investor Relations. Sir, please proceed.
Kevin A. Mitchell -- Senior Vice President of Investor Relations
Thank you, and good afternoon. Welcome to HCI Group's fourth quarter and full year 2018 earnings call. With me today are Paresh Patel, our Chairman and Chief Executive Officer; and Mark Harmsworth, our Chief Financial Officer. Following Paresh's opening remarks, Mark will review our financial performance for the quarter and then turn the call back to Paresh for an operational update and business outlook. Finally, we will take your questions. To access today's webcast, please visit the Investor Information section of our corporate website at hcigroup.com.
Before we begin, I would like to take the opportunity to remind our listeners that today's presentation and responses to questions may contain forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995. Words such as anticipate, estimate, expect, intend, plan and project and other similar words and expressions are intended to signify forward-looking statements. Forward-looking statements are not guarantees of future results and conditions, but rather are subject to various risks and uncertainties. Some of these risks and uncertainties are identified in the Company's filings with the Securities and Exchange Commission. Should any risks or uncertainties develop into actual events, these developments could have material adverse effects on the Company's business, financial conditions and results of operations. HCI Group, Inc. disclaims all the obligations to update any forward-looking statements.
With that said, I would now like to turn the call over to Paresh Patel, our Chairman and CEO. Paresh?
Paresh Patel -- Chairman and Chief Executive Officer
Thank you, Kevin, and welcome, everyone. I want to start by saying a few words about Hurricane Michael, which hit the Florida Panhandle in the fourth quarter. Our primary focus as always is on taking care of our policyholders affected by this event. Fortunately, we have a minimal policyholder footprint in that area. We don't expect Michael to be a major reinsurance event for us. We did, however, incurred a full retention loss, which contributed to an adjusted net loss of $0.48 per share for the quarter. For the full year 2018, we earned $3.23 per share on an adjusted basis. Mark Harmsworth, our CFO will go into more detail in a moment.
Other highlights for the fourth quarter include, we paid our 33rd consecutive quarterly dividend, and after the quarter end, we increased our quarterly cash dividend by 6.7% to $0.40 per share for quarter. This is our ninth dividend increase since we started paying dividends nine years ago. Also during the quarter, we continued our successful launch of TypTap Home, our technology driven homeowners insurance product. TypTap Home is now available in most parts of Florida.
I will explain our important growth plans for TypTap and HCI after Mark's comments and numbers for the fourth quarter.
Mark Harmsworth -- Chief Financial Officer
Thanks, Paresh. So as Paresh mentioned, in the fourth quarter, we lost $0.48 per share on an adjusted basis. On a GAAP basis, we lost $0.95 per share. There were a few significant things that led to the loss this quarter. The first, of course, was Hurricane Michael. As you know, Hurricane Michael struck the Florida Panhandle on October 10, 2018. While it was a devastating storm, it was not in an area of significant policy concentration for us. We have estimated the ultimate loss for Hurricane Michael at $22.25 million including flood. Some of this has been ceded to reinsurance and a net loss of $16.5 million is included in our loss expense for the quarter.
Second, in the fourth quarter, we booked about $5 million of adverse development on prior period, non-cat losses, as well as some development related to Hurricane Matthew. The third item relates to the late year decline in equity markets, which dropped about 12% in the fourth quarter. In accordance with the new accounting rules, the change in value of equity securities now runs through the income statement. As a result, we recorded a loss of $5.7 million in the fourth quarter.
As I mentioned before, the new accounting rules can inject earnings volatility in periods to stock market volatility, and this was certainly one of those periods. Speaking of which, as you know, in the first quarter of 2019, we've seen a bit of a reversal of some of the equity market declines from last year. And while there's certainly, no certainty around what will happen in March, the recovery to this point would suggest that a significant portion of the unrealized losses in the fourth quarter maybe recovered this quarter.
Let's turn to the full-year results for 2018. For the year after-tax net income was $17.7 million, compared to an after-tax net loss in 2017 of $6.9 million. Diluted earnings per share for the full year were $2.34 on a GAAP basis and $3.23 on an adjusted basis. There are few things related to our full-year results that are worth mentioning. First, net investment income was up about 45% from $11.4 million in 2017 to $16.6 million in 2018. Second, as this is the case in the fourth quarter, the decline in the equity markets led to an unrealized loss of $10.2 million for the full year 2018. Third, loss and loss adjustment expenses were down about $56 million from 2017 to 2018. The biggest part of the decline was of course the impact of hurricanes. The $16.5 million net loss from Hurricane Michael was $37 million less than that of Hurricane Irma in 2017 and explains a big chunk of the decrease in loss expenses.
Another part of the decrease in loss expenses relates to loss development. Given the environment around assignment of benefits litigation, we have made some significant adjustments for prior year development in recent years. However, the development booked in 2018 was about $6 million less than what we booked in 2017, which also helped to reduce overall loss expenses this year. The rest of the decline about $13 million is explained by the fact that 2018 -- the 2018 accident year is performing significantly better than 2017. When the impact of hurricanes and prior period development are removed, what you see is that, 2018 is shaping up to be a very good accident year. The number of claims reported for the accident year were down 22% compared to 2017.
The number of lawsuits reported for the 2018 accident year were down 34%. As a result, the ultimate core loss ratio for 2018 is expected to be lower than 2017, again, driving loss expenses down. We think the experience to-date for 2018 is encouraging and actually, this is a side note, while we booked some adverse development this year for all accident years combined, we actually had favorable development on accident year 2017, which is also encouraging.
Before moving to the balance sheet, I wanted to make a quick comment about our effective tax rate. We have mentioned a few times that we expect our effective rate to be around 27%. Our rate was somewhat lower than that in the fourth quarter this year and somewhat higher for the full year, but these were temporary fluctuations related to accounting for certain restricted stock that will expire. Going forward, we still expect our effective rate to be about 27%.
Now to the balance sheet. The first thing that stands out when comparing December 2018 to last December is, changes to our investment mix. While the total value of investment hasn't changed that much, we have been making structural changes that are resulting in a portfolio with lower average duration, but higher yield. Combined with better returns on cash, this is driven higher investment income, while at the same time, reducing volatility and risk.
The other change I wanted mentioned on the balance sheet is a change from September to December. Total reserves are up about $69 million from September to December. There are two reasons for this. First, Hurricane Michael was a fourth quarter event and so we set up the appropriate reserves for that this quarter. Second, we increased the consolidated ultimate expected loss for Hurricane Irma from $326 million at the end of September to $411 million including flood at the end of December. So the total reserves for Hurricane Irma of just over $113 million are significantly higher than they were in September.
A few other quick numbers. In the fourth quarter, we bought back 3,338 shares, which brings the total number of shares bought back under the 2018 buyback program to 511,628 and fully utilized the $20 million allocated to the program. The number of common shares outstanding at the end of December 31st was 8,356,730 down, about 5% for the year, and the number of fully diluted shares outstanding at the end of the year was 11,586,478. Lastly, book value per share as of December 31st was $21.71.
Before turning it back to Paresh, just a quick comment on holding Company liquidity and capital structure. As you know, we have a convertible debt issue, which is maturing on the 15th of this month. The obligation is just under $90 million and we have the funds set aside in the holding Company to settle this obligation. As a reminder, if the notes are settled in cash, our fully diluted earnings per share should go up about $0.10 to $0.12 per share per quarter beyond what they otherwise would have been. If the obligation is settled in stock, our book value per share should go up between $5 and $6 beyond what it otherwise would have been. So either settlement mechanism is a positive result for us.
In terms of holding Company liquidity, we had $115 million of cash and securities at the holding Company level at the end of the year, not including limited partnership investments. So we will have cash left over at the holding Company even if all of the notes are settled in cash. In addition, we have the new $65 million revolving credit facility available at our discretion if we wanted to make any strategic investments. So the balance sheet is in great shape. We have two insurance companies with plenty of surplus, we are paying down debt and the holding Company has cash and an inexpensive source of additional funds available at LIBOR plus 2 if any strategic investments opportunities come up.
And with that, I will turn it back to Paresh.
Paresh Patel -- Chairman and Chief Executive Officer
Thank you, Mark. Obviously, with Hurricane Michael and the gyration in the stock market, Q4 was not our best quarter. However, we expect to bounce back to our usual profitability in Q1 of this year. And on a core basis, Homeowners Choice continues to be a healthy book of business with about 18% margins despite the difficulties in the Florida market. Those margins are necessary to retain -- to handle retention losses such as Michael when they occur. But I want to talk about the long-term future of the HCI Group.
We have always thought, Homeowners Choice was a great book of business, and the best thing we could achieve would be to create another insurance Company with similar profit margins. Unfortunately, the citizen (ph) assumption well ran dry several years ago. So, we've been working on our different way to get there, and we are there. We've developed data and technology that turns every single family home in Florida, about 5.3 million rooftops into a citizens like takeout opportunity.
Our quoting and administrative system instantly applies our proven takeout algorithms to each opportunity that we quote. Put it all together and you have the TypTap Insurance Company. TypTap is now three years old and has been through five hurricanes. But its operating results are very promising. And TypTap is beginning to show real growth. In force premium at the end of February is about $17 million and policies in force are almost 12,000. And to -- going forward, TypTap is adding about $500,000 in new business premium per week and it is accelerating. Keep in mind, that $500,000 of premium at a 20% margin produces about the same margin dollars as doing $2 million of new business at only a 5% margin. It's not just all about growth, it's about profitable growth.
And numbers that I alluded to you before, but are now publicly available. According to filings of stat numbers for companies with the Florida Insurance Regulators, TypTap's pre-tax margins of 23.5% for 2018 are the best in the industry. Just to provide some color, most of the industry on average end at about 2%. This is an outstanding number. With that, it makes it very simple, a path forward is straightforward. We aim to grow TypTap to about $300 million or more. That's on top of the profitable Homeowners Choice book and we have no need for acquisitions, citizens to be repopulated or need for any additional capital, we have plenty of all of the above. So this is a plan for the next few years to do that.
And one more thing, Florida is just the first state in regards to our growth plans. Just imagine us applying this technology into other states and lines of business. We are just beginning to explore the full power of this technology and the analytics that go with it.
And with that, we're ready to open the call for questions. Operator, please provide the appropriate instructions.
Questions and Answers:
Operator
Thank you, sir. Ladies and gentlemen, the floor is now for your questions. (Operator Instructions) And our first question comes from Matt Carletti with JMP Securities. Please go ahead, sir.
Matthew John Carletti -- JMP Securities LLC -- Analyst
Thanks. Good afternoon.
Paresh Patel -- Chairman and Chief Executive Officer
Good afternoon, Matt.
Matthew John Carletti -- JMP Securities LLC -- Analyst
Paresh, just had a few questions. Maybe to start with, there has been some news this week from Demotech regarding guidelines for reinsurance purchasing, I think, primarily the first event being raised to 130 years from 100 years. Can you give us your view on that? The impact if any on HCI, as well as the industry more broadly?
Paresh Patel -- Chairman and Chief Executive Officer
Sure, Matt. We got that memo last Thursday along with everybody else. The net effect of going from 100-year first event limit to 130, basically mean your tower on it -- on that, if it was at 100 year level has to go up about 14%. For us that delta is not as big because we were already buying to greater than 1 in 100. And secondly, because of the way our tower restructured, 45% of that number is already more than bought for because of the Florida Hurricane Cat Fund. So to us, the impact is not as great as to other folks, but it is material to most people, especially if you've been buying it to 1 -- just to 1 in 100.
Matthew John Carletti -- JMP Securities LLC -- Analyst
Okay. And then you mentioned the Cat Fund there and I guess that leads into my next question. Yeah, there's been some movement -- yeah, some have stated 75%, we've seen another peer moved to 90%, you guys are at 45%. Any color on your likelihood to stay at 45%? Why you might like being there if you intend to move it higher? Just kind of the likelihood of at this point as you first renewal?
Paresh Patel -- Chairman and Chief Executive Officer
Yeah. Absolutely, Matt. We had to all make selections last Thursday to do this.
Matthew John Carletti -- JMP Securities LLC -- Analyst
Okay.
Paresh Patel -- Chairman and Chief Executive Officer
We chose to stay at 45%. I think everybody selections has not -- it just became public this morning. I can tell you the color as to why we stayed at 45%. It's for a couple of reasons. One, is years ago, when we had moved from 90% to 45%, we have been very clear as to why we did it. We weren't doing it to buy cheaper reinsurance, we were doing it to buy better reinsurance. And even, historically, our additional 45% that we have been buying from the market has been slightly more expensive than the Cat Fund, right? It's not always about the cost, it's about the value of this.
And the simple decision, about should we said 45% or 90%, we didn't take -- make it lightly. And we talked to our reinsurance brokers, Guy Carpenter, and they came back with a very simple idea, which was that, take Irma, your losses in Irma, assume you had bought -- you had kept the Cat Fund at 90% and see what position you would be in at this point. It's a universal thing you can do. As soon as you do that, you realize that you buy to 90% Cat Fund and you get an Irma, you are seriously concerned about going through the top of your tower. And heaven forbid if Irma have been into Miami.
Once you look at that number -- and by the way you can do that for every carrier. It becomes very sobering as to what type tower you should buy. Actually that concept Demotech's 1 in 130 might actually provide additional safety for a number of carriers.
Matthew John Carletti -- JMP Securities LLC -- Analyst
Right. That make sense. And then, just last one. I mean, I guess, three or four quarters ago that you talked a bit about making offer for one of your peers that recently made it -- has reached a deal to acquire another, mostly ex-Florida but also Florida insurer. Any thoughts on, obviously, M&A yourself. There's a 30 day shop period there, I don't know if you can comment on? And that would be of any interest HCI? Just any thoughts on that matter would be appreciated.
Paresh Patel -- Chairman and Chief Executive Officer
Sure, Matt. Yes, the deal that you're talking about, I think, it was announced on 25th of February.
Matthew John Carletti -- JMP Securities LLC -- Analyst
Yeah.
Paresh Patel -- Chairman and Chief Executive Officer
And it did have a 30 period -- 30-day go-shop period. As you can imagine lots of people have been reaching out to lots of other people about if their interest in the go-shop. We were obviously contacted as well. And couple of items about that. One is, the economics and synergies and stuff that were being considered for the deal and may be possible, you have to look at it in the new light of the Demotech requirement of buying additional limit of insurance, that will...
Matthew John Carletti -- JMP Securities LLC -- Analyst
Right.
Paresh Patel -- Chairman and Chief Executive Officer
...definitely affect the daily economics. So that's one part of it. And then the second part of it from our own perspective, we are setting an opportunity to organically grow our business by a couple hundred million dollars with 20% margins, right? It doesn't necessarily make a whole lot of sense to focus on trying to take on the business that's making low single-digit margin business and also paying a premium. But if you're in that world that might make sense. It doesn't make sense for us at this point. And given the deal terms that have already been laid out, we're trying to find a justification as to why we should get involved. And so far at least, we haven't being able to make a compelling business case.
Matthew John Carletti -- JMP Securities LLC -- Analyst
Okay. Great. Thank you very much for the color and best of luck in 2019.
Paresh Patel -- Chairman and Chief Executive Officer
Thank you.
Mark Harmsworth -- Chief Financial Officer
Thanks, Matt.
Operator
We'll take our next question from Mark Hughes with SunTrust.
Mark Douglas Hughes -- SunTrust Robinson Humphrey, Inc. -- Analyst
Yeah. Thank you. Good afternoon.
Paresh Patel -- Chairman and Chief Executive Officer
Good afternoon, Mark.
Mark Harmsworth -- Chief Financial Officer
Hi, Mark.
Mark Douglas Hughes -- SunTrust Robinson Humphrey, Inc. -- Analyst
The -- you've had expressed an openness to look a little more closely at the South Florida, the Tri-County area. I think you suggested you saw some good opportunity perhaps. Is that still on the table? Or is TypTap more likely to be the focus of growth?
Paresh Patel -- Chairman and Chief Executive Officer
Actually when we talked about South Florida opportunity, we were talking about TypTap. And as TypTap is growing and doing this $500,000 of premium a week, it's actually looking more and more like Homeowners Choice. If you look at the Homeowners Choice book, about a third of it's in the Tri-County, a third of it's are in the Tampa Bay Area, and third of it's in the rest of the State. The TypTap Homeowners book is being assembled along the same metrics, albeit with better margins.
Mark Douglas Hughes -- SunTrust Robinson Humphrey, Inc. -- Analyst
When you think about your good performance, the persistency of the HCI book. How do you think about the growth for 2019 and 2020. I heard you were just saying that the profit impact is more meaningful for TypTap. So I'm wondering if you can just give some general thoughts about the top-line and then maybe underwriting profit as well?
Paresh Patel -- Chairman and Chief Executive Officer
Okay. So in terms of top-line growth, we've already stopped shrinking and it's not visible in the fourth quarter, but we starting to see that in late part of the first quarter. So, we are having TypTap organic growth far offset any shrinkage in the Homeowners Choice book at this point. So as time goes on that should hopefully start moving us closer, first of all, to the $400 million mark as a group, and then, hopefully, beyond that to the $500 million mark. So we're on that path. So that part is occurring.
As far as the profitability goes, again, we have started seeing that we were doing this and it was working very well. We wanted to give it some time to make sure that it was fairly sustainable. And published Yellowbook numbers from 2018 speak for themselves to that matter, because whatever weather was, whatever issues there were, TypTap suffered to the same thing as the rest of the industry. But the results are materially different.
Mark Douglas Hughes -- SunTrust Robinson Humphrey, Inc. -- Analyst
I'm sorry, I had lost my train of thought. The core loss ratio for 2018 is improved over 2017. I-you probably have or we have enough information at the back end of that.
Paresh Patel -- Chairman and Chief Executive Officer
Yeah.
Mark Douglas Hughes -- SunTrust Robinson Humphrey, Inc. -- Analyst
But could you -- can you maybe talk about -- in 2019, I think, a lot of the lawsuit activity has been absorbed by maybe some of the reinsurers has -- as they pick up the tab? Do you think some of that energy will get redirected back at you as we progress through the year, and just kind of your general thoughts on AOB trends?
Paresh Patel -- Chairman and Chief Executive Officer
So, Mark, you are going to get a -- this is a slightly complicated answer. For the industry as a whole, what we are seeing in the AOB trends, et cetera is, because of Irma and the growth of AOB lawsuits, et cetera, across the industry. It is starting to spread beyond South Florida into places like Orlando, the East Coast of Florida and even some in Tampa Bay. So there is a growth in AOB abuse outside of South Florida that is now starting to occur. We see that on industry trends and everything else.
The numbers that Mark talked about what we did in 2018 in Homeowners Choice is actually -- partly because of Irma, but a lot of it is also to do with underwriting actions we took back in 2016 in terms of how to reposition the book, et cetera, and you'll see the results of that come through and we keep seeing that number month after month. Of course, we've been seeing that improved performance for about a year now. But you don't want to take three dots -- three months worth of performance and extrapolate forever. But we continue to keep seeing this improved performance if you use 2017 and pre-Irma as a benchmark, we keep getting a much better result from starting January 2018 and going forward, and that trend hasn't reversed yet. Maybe it will someday, but so far so good.
Mark Douglas Hughes -- SunTrust Robinson Humphrey, Inc. -- Analyst
Thank you.
Operator
We'll take our next question from Freddie Sleiffer with KBW.
Freddie Sleiffer -- KBW -- Analyst
Hi. Good evening. Firstly, I was wondering if you have an update to your Irma gross loss estimates?
Mark Harmsworth -- Chief Financial Officer
Yeah. So, I mentioned it in my prepared remarks, it's -- we updated it to $411 million including flood.
Freddie Sleiffer -- KBW -- Analyst
Okay. And then, Michael, is still the same?
Mark Harmsworth -- Chief Financial Officer
Yeah. So Michael was a fourth quarter event, so this is the first time we posted losses for Michael. So, as I mentioned, the total gross loss $22.5 million, again, including flood and a net loss of $16.5 million, again, including flood.
Freddie Sleiffer -- KBW -- Analyst
Okay. And then, I think, I heard you say that there was about $5 million in adverse development, which accident years did this mainly come from?
Mark Harmsworth -- Chief Financial Officer
Well, if you look at -- I would sort of tend to look at the -- all of the adverse development that we booked in the year. And as I mentioned in my prepared remarks, we had -- we actually had favorable development related to 2017. But the bulk of it was -- I mean, it's sort of a mix of 2016, 2015 and a little bit of 2014, which has been fairly consistent, but we actually had, as I mentioned, favorable development for 2017 that we booked.
Freddie Sleiffer -- KBW -- Analyst
Great. Okay. And then, since you already made the Cat Fund election. I was just wondering what your current are going into the mid-year renewal in term of pricing? Maybe any structural changes that you're thinking of making to your program?
Paresh Patel -- Chairman and Chief Executive Officer
I don't see that we're making any major structural changes to our program. But as far as pricing goes, we are just starting the trips to London (ph) and Bermuda and the negotiation of that will go on over the next two months. So it will be inappropriate for me to comment as to what the ultimate pricing will be. Obviously, it's a -- it's going to be a drawn out negotiations this year. But we'll know better -- when we do the first quarter earnings call in May.
Freddie Sleiffer -- KBW -- Analyst
Okay. And then what return period do you currently buy to for the first event in your reinsurance program? And what percent increased would it cost, all things being equal to last year to increase that 1 in 130 year return period?
Paresh Patel -- Chairman and Chief Executive Officer
Great question. It was the first thing we asked when we saw the Demotech memo. I think if you did this from the 2018 tower, based on what we had done, we would probably have had to buy an additional $20 million or $30 million of limited mos,t which -- because we are already that far off then the tower and the Cat Fund would have gone beyond that, yeah?
Freddie Sleiffer -- KBW -- Analyst
Right. Okay. And then, Mark, I think, you said in your prepared remarks that the net investment income was higher this quarter since you've been making some structural changes with the lower average duration, but a higher yield.
Mark Harmsworth -- Chief Financial Officer
Yeah.
Freddie Sleiffer -- KBW -- Analyst
And usually I think...
Mark Harmsworth -- Chief Financial Officer
Yeah.
Freddie Sleiffer -- KBW -- Analyst
...shortening the duration would lead to lower yields. So how are you approaching and achieving this?
Mark Harmsworth -- Chief Financial Officer
Well, I mean, we are -- there's a few things going on. I mean, we -- I guess, sort of the biggest change that we made was, throughout the year we really significantly reduced our exposure to municipal bonds, which had an average duration of six years to seven years. And we move that for time into shorter duration with a slight reduction in yield. But much lower return, we kept that money really short and now we're starting to place that money out again at yields that are -- just because of what's happened in the yield curve and good timing. We started now to place that money out at rates that are higher than what we were paying on those munis. It's like two-year term to maturity rather than an average of seven.
So it's just sort of managing the timing of these things and paying really close attention. As you know, the -- there have been a lot of shifts in the short end of the yield curve. And then the other thing that's going on too is, when you compare year-over-year or quarter-over-quarter, we've got a pretty significant difference in the yield that we're getting on cash, I mean, we're getting $2.25 on cash now instead of back in the day when really got nothing. So you put those things together and you're starting to see an upward trend in investment income. We had a good year with limited partnership income as well. But, generally, things are trending up, and it's that -- what I think it was that proactive restructuring of the portfolio and anticipating on what's going on and it's working out well for us and we'll continue to see that in 2019.
Freddie Sleiffer -- KBW -- Analyst
Okay. Great. Thanks. And then, were there any one-time benefits this quarter in your G&A expenses? I saw that was down quite a bit from the previous three quarters?
Mark Harmsworth -- Chief Financial Officer
Yeah. So, whether you look at personnel expenses or whether you look at personnel expenses in OpEx, I'll put together, it will move around from quarter-to-quarter. And we were up over the fourth quarter last year, but down over the third quarter this year, a lot of that is chewing up bonus accruals based on what's going on in the business. But if you look at it over time, it averages about -- total of about $10 million a quarter. And if you look at the full year 2017 to 2018, the total of all that changed by about 0.5% I think. So there really isn't -- you can get movement from quarter-to-quarter, but if you look at it over a period of a year, it doesn't tend to move around very much.
Freddie Sleiffer -- KBW -- Analyst
Okay. And then, Paresh, just one last one if I may. I think that you mentioned in your closing comments something about applying the TypTap technology in other states. Is this something you're considering? Since I know previously you said you didn't really have an intend of expanding outside of Florida?
Paresh Patel -- Chairman and Chief Executive Officer
Yes. We are. And actually, we have multiple different opportunities of being because of the technology. We don't need somebody to apply it whereby we go into hypothetically Ohio and start licensing and writing business there. Because of how we got the technology, we could partner with one of the top five carriers in the State of Ohio and have them use our technology to drive better margins for themselves, and we will just keep licensing the software. So we have different ways of expanding beyond Florida, without necessarily taking on balance sheet risk.
Freddie Sleiffer -- KBW -- Analyst
Okay. Great. Thank you very much for the answers.
Operator
At this time, this concludes our question-and-answer session. I would now like to turn the call back over to Kevin Mitchell, who has a few closing remarks.
Kevin A. Mitchell -- Senior Vice President of Investor Relations
On behalf of the entire management team, I would like to express our appreciation for the continued support we receive from our shareholders, employees, agents, and most importantly, our policyholders. We look forward to updating everyone on our progress in the near future.
Operator
And ladies and gentlemen, thank you for joining us today for our presentation. This concludes today's call. You may now disconnect.
Duration: 36 minutes
Call participants:
Kevin A. Mitchell -- Senior Vice President of Investor Relations
Paresh Patel -- Chairman and Chief Executive Officer
Mark Harmsworth -- Chief Financial Officer
Matthew John Carletti -- JMP Securities LLC -- Analyst
Mark Douglas Hughes -- SunTrust Robinson Humphrey, Inc. -- Analyst
Freddie Sleiffer -- KBW -- Analyst
Transcript powered by AlphaStreet
This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.
